Finance Final

Ideal Financial Foundation Timeline by Age

Age 16-18: Create a checking account & save 3-6 months of expenses. Anytime: Create a savings account (save 10%). Age 22-25: Start retirement accounts (10%). Age 30+: Invest in stocks.

FDIC

Federal Deposit Insurance Corporation; insures bank account deposits up to $250k per depositor, per insured bank.

Major Stock Market Indexes/Exchanges

1. Dow Jones, 2. NYSE (New York Stock Exchange), 3. Nasdaq, 4. S&P 500

Mutual Fund

A collection of diversified investments (stocks, bonds) that spread out risk.

FICA

Consists of Social Security + Medicare taxes. (Takes 7.65% of gross income)

Overtime Calculation

Hours worked over 40 in a week are compensated at a higher rate, usually Time-and-a-Half.

Vested

The percentage of employer's retirement contributions you can keep if you leave, based on tenure.

Net Worth Formula

Assets minus Liabilities.

Tax Deductions (Standard vs. Itemized)

Compare both to choose the higher deduction value; lowers taxable income.

C.D. (Certificate of Deposit)

Fixed term with penalties for early withdrawal.

M.M.A. (Money Market Account)

Liquid savings account requiring higher balance for better rates.

Bonds

Lending money to government/business for fixed return.

Stocks

Represents ownership in a business.

Bull Market

Market is rising; time to sell.

Bear Market

Market is falling; time to buy.

Gross Pay

Earnings before deductions.

Net Pay

Earnings after deductions.

Roth Account

Money taxed before contribution (tax-free withdrawals).

Traditional IRA

Pre-tax money (taxed upon withdrawal).

401(k

retirement accounts for-profit businesses

403(b) Account

retirement account for non-profits

Fixed Expenses

Fixed: Costs that remain the same monthly (e.g., rent).

Variable Expenses

Variable: Costs that fluctuate (e.g., utilities).

reserve fund

emergency/long term funds saving 3-6 month of expenses

Pay yourself first

Save for urself 10% to put into savings