personal finance

define a need

something you must have to live or function

what is an example of a need

rent, food, water, electricity

define a want

something you would like, but not need

what is an example of a want

shoes, video games,

define opportunity cost

what you give up for another option

how can a daily purchase affect you budget long term

small purchases add up very fast

define gross pay

the total amount of money earned before deductions are taken out

define net pay

the amount of money you take home after the deductions are taken out

what deductions are taken out of your paycheck

federal and state income tax, social security, medicare, health insurance, retirement contributions

what form tells your employer how much to deduct in taxes

w-4

define employee benefits

extra perks for employee

what are some examples of employee perks

health insurance, paid time off

what is the difference between debit, and credit cards

debit, money that comes strait from your bank account

credit-money that is borrowed and has to eventually be paid back

what does it mean when a check clears the bank

money has been successfully transferred from payers account to receivers account

what are three types of endorsements and define them

bank endorsement- sign your name

restrictive endorsement- “for deposits only”

special endorsement- signing over to someone else

what is the agency that ensures your bank account for up to $250,000

FDIC

define short term goal

a goal you want to achieve soon

define long term goal

a goal that takes years to achieve

what does SMART goal stand for

s-specific

m-measurable

a-attainable

r-realistic

t-time bound

when are goals most affective

when they are written

what is the term pay yourself first mean

pu the money you earn into your saving right away before spending

what is the relationship between risk and return, regarding the stock market

higher risk is associated with the potential for higher return

why should you diversify your financial portfolio

to reduce risk

what is an advantage of companies issuing stock instead of taking a loan from a bank

no loan repayment or interest

do you want to earn a lower or higher rate or return on your invesments

higher

do you want a lower interest rate on a a credit card, or higher rate

lower

when using credit cards, how do you avoid paying interest and penalties

pay full balance on time

what are the advantages of using credit card wisely

you build credit, rewards, emergencies

who might look at your credit history/score

banks, landlords, employers