★ personal finance course

what are some keys to budgeting?

knowing your income and expenses so that you can earn more than you spend

how do I manage my spending?

track income and expenses to make sure they’re aligned with ur spending and saving goals

which actions can help save money on variable and fixed expenses?

share an apartment with a friend and make food at home more often than dining out

net income

amt of money your take home after all deductions

which service can students use to complete their taxes for free?

turbotax

variable expenses

expenses that can change from month to month

what should I look for in my first apartment?

proximity to work or school, safety, and affordability

blue and gold opportunity plan at UC schools

financial aid program that covers tuition for CA residents whose families earn less than a specific income threshold

what an you do to prevent “points” from appearing on you public driving record, and therefore keep your insurance premiums from rising?

attend traffic school

need-based aid vs. merit-based aid

need-based aid is based on financial need, while merit-based aid is based on academic/other achievements

average interest rate in savings account at majors banks (2024):

0.01%

overdraft fee

a fee charged when your account balance goes below zero

if you’re a victim of fraud who reported it immediately to the bank, your bank will give you..

all your money back, once they investigate your case

what can you do about fees in savings/checkings accounts

a. fees are unavoidable

b. paying fees is part of life that you must always accept and can never do anything to change

c. choosing an account w/o maintenance fees and not spending more than you have

d. only use ATMs that are free of charge, in your bank’s network

choices c and d

what’s one thing you need to open a savings account?

a valid form of identification (driver’s license, social security car, passport, birth certificate)

interest rate from depositor POV on savings account

money earned, expressed as a % of the amt you deposit

all the following are ways to use a debit card except:
a. making online purchases

b. receiving cash back at a grocery store

c. withdrawing cash from an ATM

d. increasing your credit score

d.

what should a checking account be used for?

everyday budgeting

compounding

process of earning interest on both initial principal and interest previously earned

banks and credit unions: similarities and differences

banks are for-profit, credit unions are not-for-profit, both offer similar services

benefit of using a credit card responsibly?

a. convenient to use

b. can get rewards like cash back or points

c. protection from fraud

d. can help build credit history

e. all of the above

e.

what does your monthly mortgage payment typically include?

principal, interest, property taxes, and homeowner’s insurance

if you borrow $20k for college using 5.5% federal loans, what’s your monthly payment?

about $220

purpose of grace period on a student loan

to give time to adjust to your budget after college and starting a full-time job

how can you avoid paying interest on a credit card

paying full balance by the due date

private vs. federal student loans?

a. all answers

b. federal loans have fixed interest rates that are typically much lower than private student loans

c. federal loans have flexible repayment options; private loans might not

d. federal is from the government, private loans are from banks

e. federal loans can be forgiven for graduates w/specific types of jobs

all answers

which is better: debt for assets that appreciate or depreciate in value?

debt for assets that appreciate in value

all impact your credit score except:

a. credit utilization rate

b. annual income

c. the total amount of debt owed

d.payment history on loans and credit cards

b.

how is setting up auto-pay for the full balance by the due date, as well as making payments every week become beneficial?

a. helps build credit

b. keeps debt low

c. all answers

d. wont be late on payments

e. makes budgeting easier; wont seem like you have more money than actuality

c.

what can affect whether you get a mortgage?

a. all answers

b. income

c. employment history

d. credit score

a.

S&P 500

a measurement of the performance of 500 large companies in the stock market

why is it important to know your own risk tolerance when investing?

so you can choose investments that match you comfort level with risk and financial goals

which of the following is true about Roth IRAs?

i. you pay taxes on Roth earnings in the future

ii. you pay taxes on your income today, not in the future

iii. Roth IRAs are only available to 70+

iv. you only pay taxes on dividends, not price appreciation

ii.

what do you need to open an investment account?

i. social security/tax identification number

ii. email address and mobile phone number

iii. be 18+, or have an adult who can help create a “custodial” account

i, ii, and iii only

benefits of investing in a 401(k) plan?

i. your employer may match your contributions to this account

ii. higher contribution limits (compared to IRA)

iii. pay lass in taxes

iv. all answers

iv.

how can you make money by investing in stocks?

a. dividends

b. capital gains

c. interest rates increase

choices a. and b.

in a traditional 401(k)/IRA, when do you receive tax benefit?

when you withdraw the funds in retirement

an example of dollar-cost averaging

buying $500 of a mutual fund every month for a one-year period

T/F : if all of your savings/investments are cash, you are not diversified and your wealth will be constantly eroding due to inflation.

true

what can diversification do for your portfolio?

help lower risk by spreading investments across diff asset classes and industries

investing

using your money to make more money

stock

a piece of a company that you can own

investment plan

a detailed strategy for managing your money and investments for the future

company match in a 401(k) plan

when the company contributes a % of the employee’s salary to their retirement acc, based on the employee’s cotributions

Zoe is a self-employed entrepreneur who wants to build a retirement nest egg /potential for tax-free withdrawals— which acc. should she open?

Roth IRA

rebalancing

the process of buying and selling investments to realign your investment strategy with your portfolio when the two no longer match up

portfolio

a collection of investments owned by an individual

mutual fund

a type of investment that holds a collection of assets, like stocks

what is Social Security intended for?

to help supplement your retirement income

bond

a loan made to a gov/orp where they have to pay you interest

Roth IRA vs.Roth 401(k)

Roth IRA is opened on your own, while a Roth 401(k) is opened through your employer

your capital gains would be considered long-term and therefore taxes at lower basis rate if you hold the investment for

at least one year

dividend

money a company pays to its shareholders

asset allocation

the process of dividing your investments among diff types of assets, lie stocks, bonds, and cash

standard deduction and its significance

a fixed amt ($14.6k for single individuals in 2024) that reduces “taxable income”

how much should you have saved in an emergency fund?

it depends on your lifestyle, expenses, income, financial mindset, and access to money elsewhere

insurance premium

the amt you pay for insurance coverage each month/year

example of a fixed expense

rent of mortgage payments

importance of college’s grad rate

gives an idea of how many students finish their degree on time

purpose of FAFSA

to allow gov and university determine eligibility for need-based financial aid

how long can students legally be included on their parents’ health insurance?

until age 26

why would you use a Net Price Calculator when looking at colleges?

to get an idea of how much college might cost you after considering financial aid

insurance deductible

the amt you must pay out of pocket before insurances starts to pay a clai

when should you re-evaluate and adjust your emergency fund?

when your perspective or life circumstances change

benefit of having a emergency savings fund

protects you from unexpected financial expenses

how do I know how much money to save?

save w/specific financial goals in ind, whether it is to build wealth, buy a house, go on a vacation, etc.

what happens to insurance premiums if you get a speeding ticket or are at fault in an accident?

your premium typically increases

why should students file their taxes, even if they don’t legally have to?

i. all answers

ii. to build a positive tax history

iii. to avoid penalties

iv. to receive a potential refund from the government

i.

if you suspect someone else has unauthorized access to your account, what should you do?

immediately call the number on the back of your debit card/number on bank’s official website to report the concern and seek assistance

if you get an email that appears to be from your bank and they’re asking to verify your password and SSN, you should

know its likely a scam

what does FDIC/NCUA insurance provide for your deposits in a bank or credit union?

insurance coverage up to $250k in case of bank or credit union failure

certificate of deposit (cd)

a special acc at your bank/credit union where you agree to leave your money untouched for a set period of time, usually offering better interest rates than regular savings accounts

importance of regularly reviewing acc statements

to identify unauthorized transactions, ensure accuracy, and be aware of your acc balance

how can you avoid overdraft fees?

by monitoring your ac balance and not overspending

what should a savings account be used for?

emergency fund and short-term savings

purpose of a PIN for a debit card

to verify your identity during transactions and ATM withdrawals

even though regular savings accounts pay very little interest, they’re a better spot for your money compared to a “good hiding spot” because:

i. the money in a savings acc is less likely to be stolen or lost

ii. the money in a savings acc is easily transferable to another acc

iii. all of the above

iv. the money in a savings acc is insured by the FIDIC up to $250k

iii.

high-yield savings account

a savings acc that pays you a higher interest rate than traditional savings accounts

how do you set up direct deposit for your paycheck

contact your employment’s HR department and fill out the form requiring your bank account number and routing number

what is 2FA in context of acc security

verifying your identity thru 2 separate steps, like a password and test msg code

inflation

decrease in the value of money over time

when comparing interest earned on accounts at banks and credit unions..

credit unions usually pay acc holders higher interest compared to banks

how should I monitor my accounts?

regularly (at least 1-2/week) review recent transactions and monitor your acc balance

how long do you typically have to pay back a student loan?

10 years

how often does interest typically compound on credit card debt

daily

what’s a feature of a fixed-rate mortgage?

your interest rate stays the same

credit utilization and its impact on credit score

keeping your credit utilization rate below 30% can positively affect your credit score

downside to spending all your money on a car

the car’s value goes down over time

downside of credit cards

high interest rates and fees if you’re late on payments

credit utilization

total amt of credit you have used compared to your total available credit, expressed as a percentage

interest rate for undergrad fed student loans (spring 2024)

5.5%

what does “equity” mean in terms of year home

the value of your home minus what you owe on the mortgage

how long do you usually have to pay back a car loan?

5 years

when do credit card companies usually charge you interest?

if your haven’t paid off everything you owe by the due date

why are payday loans considered high-cost loans?

they have high fees and interest rates, sometimes over 300% a year

downside to only paying the minimum on your credit card?

you end up paying more interest

how long is the grace period for a federal student loan?

6 months after graduation

purpose of down payment on a car loan

to reduce the amount you need to borrpw

how are subsidized and unsubsidized student loans different

subsidized loans don’t charge interest while you’re in school

how does your credit score affect the interest rates lenders will offer you?

the higher your credit score the lower the interest rates you’ll get because lenders see you as a lower-risk borrower