wise test

budget variance.

the difference between the budgeted amount and the actual amount that you spend

debt ratio

shows the relationship between debt and net worth.

debt ratio

The lower the ratio the better off financially the person is.

debt ratio

calculated by dividing liabilities by net worth

excise tax

government imposes a tax on specific goods and services such as alcohol, cigarettes, gasoline, and airline

capital gains

are profits made from the sale of capital assets such as stocks and bonds

Capital gains

tax deferred until the asset is sold,

Capital Gains Tax

If held over one year are considered long-term capital gains and are taxed at a lower tax rate or in some cases are not taxed at all.

variable expenses

change from one period to another,examples Electricity and food expenditures

get advice from your friends

will help you the least in managing your money?

Financial planning

the process of developing and implementing a coordinated series of actions to achieve financial success.

Financial planning

need to be reviewed and adjusted to accommodate changing needs and goals.

emergency fund

Should be an important consideration when saving money

liquidity

being in cash or easily convertible to cash, How easily an asset can be converted into cash

Social Security

benefits depends on the person?s earnings over a lifetime of work

Department store charge cards.

open-end credit

Department store charge cards.

is a revolving live of credit that is offered by banks There is a limit set on the line of credit and the funds

mortgage loan

closed-end credit,made at a specified interest rate for a specified time period.

collateralized loan.

A loan that is secured by collateral, properties or assets that are subject to seizure on default.

collateralized loan.

When a person brings an item to a pawnshop to obtain cash, the transaction is considered

Federal Housing Administration (FHA) loan

insures lenders who make mortgage loans that are riskier than regular bank loans because

uncollateralized loan

A personal loan without assets to cover the loan amount.

Collateral

tangible asset that is used to secure a loan. In the case of a mortgage, the actual house or apartment serves as the collateral for that loan.

bankruptcy

will appear on the person?s credit report for 10 years

Notify the credit card companies in order to negotiate a new payment plan.

Notify the credit card companies in order to negotiate a new payment plan.

Installment loan

a loan repaid with interest in equal periodic payments

dispose of a credit card

Cut up the card, put parts in different garbage bags, and instruct the credit card company in writing or by phone to close the account

Garnishment

Occurs when a creditor obtains a court order requiring an employer to attach an employee's earnings in order to pay back a debt.

rate of inflation

determines the time value of depositing into a savings account, and the interest rate and

Rising interest

Can lower stock prices because of lower business profits

Short-term savings instruments

your money will be available to invest in a higher interest instrument in the near future.

Short-term savings instruments

Which investment would you choose today if you believe interest rates will go up?

Credit unions

Credit unions usually pay the highest rates of interest because they have lower risks and costs of operation. They are not-for-profit organizations

Truth in Lending Act

The Truth in Lending Act requires that the finance charge and annual percentage rate be disclosed to the consumer in advance

Finance charge

The finance charge is the amount charged by the lender for any kind of credit

Finance charge

Finance charge = principal x stated interest rate x time (in years). The finance charge is used to calculate the annual percentage rate (APR)

The annual percentage rate (APR)

The true cost of credit that must be disclosed on a loan agreement

certificate of deposit

A long-term, fixed rate

certificate of deposit

If you believe interest rates are going to fall in the near future and remain low for a considerable period of time. You should invest in:

Notify the lending institution about state usury laws

when he believes he is being charged too high a rate of interest for a loan by a lending institution?

usury laws

Charging excessive interest rates on loans

Interest rate

The cost to use someone else's money for a period of time is

personal property floater

additional property insurance that covers the damage or loss of a specific item of high value

personal property floater

Would be appropriate for a woman receiving a very expensive piece of jewelry, but has homeowners insurance.

cash value of a whole life insurance

calculated amount of money which includes the premiums paid as well as the interest on that money.

purpose of Insurance

is to insure major potential losses and handle small losses from one's own resources.

premiums

Low cost items given to the consumer at a discount or for free.

cash value for whole life insurance

Policy that accumulates cash value is more expensive than a policy that does not accumulate cash value

deductible

the amount of money that the policy holder pays when a claim is settled.

deductible

250 deductible, means the person will have to pay the first $250 which will be deducted from the claim settlement paid by the insurance company.

No insurance

First get insurance against Losses resulting from an illness, accident, or disability

Liability insurance

insurance that provides protection from claims arising from injuries or damage to other people or property

Automobile insurance

covers motor vehicles, including automobiles, trucks, and motorcycles, the injuries to the driver and passengers

US Treasury Department.

must notify be to track large deposits, the federal government requires that deposits of $10,000 or more

Credit union

Credit unions are not-for-profit savings and lending financial institutions, owned by its members

direct deposits

money is generally deposited in their checking account sooner, Directly from your paycheck

Certificate of deposit

has the most predictable income?

Certificate of deposit

Most certificates of deposit (CDs) are issued with an interest rate that is fixed at a specified rate for the entire term of the deposit.

Deposit slips

list the cash deposit separately from the check as well as the total of the deposit

A person is depositing $20 in cash and a check for $50. On the checking account deposit slip, the person should

list the cash deposit separately from the check as well as the total of the deposit.

How to reduce fees paid for ATM transactions?

When making supermarket purchases with a debit card, a person adds $50 in cash to the transaction instead of using an ATM machine.

Series EE savings bond

financial product can you buy for $25, is safe, and will be worth $50 at a future date?

Savings account interest

Is taxable

Money orders are:

A purchased certificate to pay a specified amount to a specific payee

Credit unions

Are insured by National Credit Union Administration (NCUA),up to $100,000

Monetary policy

The Federal Reserve uses to regulate the nation's money supply?

debit card

Purchases made with your debit card are usually Deducted immediately from your checking account

ATM (Automated Teller Machine)

a computer terminal that you can use to make deposits, withdraw cash, transfer money between accounts, check your account balances, and pay some kinds of bills

Money in the United States includes:

consists of coins, paper currency, checking account balances on which checks can be drawn, savings deposits, and time deposits such as CDs and money market funds.

ATM Pin number

You should never write any PIN on something that might be stolen. Write your PIN down and keep it in a secure place in your home.

Financially literate?

They understand the basics of personal finance and money management

Capital gains

provides an increase in assets or wealth?

electronic funds transfer (EFT) is:

An ATM transaction,authorize a financial institution to debit or credit an account

Identity Theft

exposes consumers to greater likelihood of fraud and/or identity theft.

stock split

an increase in the number of outstanding shares of a corporation without changing the shareholders' equity

stock split

A division of shares of a company into a larger number of shares. A 2 for 1 _____ allows a shareholder to double the number of shares but worth one half of their previous value.2-for-1 ______on 40 shares that is worth $80 would result in 80 shares at $40 at the time

treasury bill (T-bill)

a secure, low risk investment

treasury bill (T-bill)

These bills are backed by the full faith and credit of the US government, therefore considered relatively risk free

dividend reinvestment

using dividends previously earned on the stock to buy more shares

Securities

All of the investments, including stocks, bonds, mutual funds, options, and commodities, that are traded.

Securities

A pharmacy is to drugs as the American Stock Exchange is to:

The Securities and Exchange Commission SEC

Agency created in 1934 that monitors the stock market and enforces laws regulating sales of stocks and bonds

The Securities and Exchange Commission SEC

Before a company can raise capital by issuing stocks or bonds, it must register the stock or bond issue with the

common stock

the most basic form of ownership, including voting rights on major issues, in a company

preferred stock

stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights

Series EE Savings Bonds

Are exempt from state and local taxes.

New York Stock Exchange (NYSE)

The largest of these markets is the New York Stock Exchange,Also known as the "Big Board"

Why does a corporation issue bonds?

To raise money for expansion or other company operations

Envelop Method

A budgeting system to track how much money you have by keeping your cash in different envelopes in each budget category. Once you have reached the end of the envelope, you stop spending money for that budget category.

50-30-20

A budgeting method that allows you to spend 50 percent on needs, 30 percent on wants, and 20 percent on savings

Better Business Bureau

A private, non-profit, organization that grades businesses on the ability to trust them. It offers consumers the ability to complain and businesses to respond.

Business Cycle

he business cycle is the natural rise and fall in GDP in an economy. The business cycle goes through four phases: expansion, peak, contraction, and trough

Certificate Of Deposit (CD)

An account into which a sum of money is deposited for a specified length of time; typically, it pays higher interest rates than standard savings and checking accounts.

Consumer Financila Protection Burea (CFPB)

A government agency that protects consumers from illegal business practices by taking action against companies that break the law.

Contraction phase

The contraction phase is a phase of the business cycle when the economy moves from a peak to trough. This phase occurs when the economy falls and GDP is decreasing.

Contractionary policy

Contractionary policy is used by the government and Central Bank to fight rapid inflation in the economy. This policy discourages individuals and businesses from spending in the economy.

credit bureau

A company that collects information relating to the credit ratings of individuals and makes it available to credit card companies, financial institutions, etc.

Credit Union

A not-for-profit financial institution that is member owned and operated and is licensed to receive deposits and issue loans.

Expansion phase

A phase of the business cycle when the economy moves from a trough to peak. This phase occurs when the economy is growing and GDP is increasing.

Expansionary policy

A policy used by the government and Central Bank to stimulate growth in the economy. This policy encourages individuals and businesses to spend more in the economy.