LifeSmarts Consumer rights and Personal finance

LifeSmarts Consumer Rights and Personal Finance Study Guide

I. Consumer Rights and Responsibilities

1. Consumer Bill of Rights

• Safety: Right to protection from hazardous goods.

• Information: Right to accurate product information.

• Choice: Right to select from a variety of products.

• Be Heard: Right to voice complaints or concerns.

• Redress: Right to compensation for misrepresentation or harm.

• Education: Right to learn about consumer issues.

• Healthy Environment: Right to non-threatening surroundings.

2. Consumer Responsibilities

• Be informed about products and services.

• Compare options and make sound decisions.

• Understand and follow the terms of agreements.

• Report unethical practices.

II. Financial Literacy

1. Budgeting

• Components: Income, Fixed Expenses, Variable Expenses, Savings.

• Tips:

• Use the 50/30/20 rule: 50% needs, 30% wants, 20% savings/debt.

• Track spending to avoid overspending.

2. Banking

• Types of Accounts

• Checking: Day-to-day expenses, low/no interest.

• Savings: Interest-earning, limited withdrawals.

• Overdrafts: Avoid overdraft fees by monitoring account balances.

• Interest Rates: Understand APY (Annual Percentage Yield).

3. Credit and Loans

• Credit Scores

• Factors: Payment history, credit utilization, length of credit history, credit mix, new credit inquiries.

• Range: 300–850 (higher is better).

• Loans

• Types: Personal, student, auto, mortgage.

• Interest Types: Fixed vs. Variable.

• Debt Management

• Prioritize high-interest debt.

• Avoid payday loans.

III. Consumer Protection Laws

1. Key Laws

• Fair Credit Reporting Act (FCRA): Protects accuracy and privacy of credit reports.

• Truth in Lending Act (TILA): Ensures transparent credit terms.

• Fair Debt Collection Practices Act (FDCPA): Limits debt collection practices.

• Consumer Product Safety Act (CPSA): Governs product safety standards.

2. Organizations

• Federal Trade Commission (FTC): Prevents deceptive practices.

• Consumer Financial Protection Bureau (CFPB): Enforces financial laws.

• Better Business Bureau (BBB): Offers business reviews and dispute resolution.

IV. Personal Finance Tools

1. Tax Basics

• Types of Taxes: Income, sales, property, payroll.

• Forms: W-2 (employee income), 1040 (tax filing).

• Deductions vs. Credits:

• Deductions reduce taxable income.

• Credits reduce tax owed directly.

2. Insurance

• Types: Health, auto, life, homeowner/renter, disability.

• Terms: Premium (cost), Deductible (amount paid before coverage), Coverage Limit (maximum payout).

3. Investing

• Types: Stocks, bonds, mutual funds, ETFs, real estate.

• Diversification: Spreading investments to reduce risk.

• Risk vs. Reward: Higher potential returns usually mean higher risk.

V. Practical Skills

1. Reading Contracts

• Key Terms: APR, penalties, terms of service.

• Red Flags: Hidden fees, mandatory arbitration clauses.

2. Fraud Prevention

• Identify phishing scams (emails/calls requesting sensitive info).

• Use secure websites (look for HTTPS and padlock symbol).

• Monitor accounts for unauthorized transactions.

3. Smart Shopping Tips

• Compare prices and read reviews.

• Check return policies and warranties.

• Use coupons, discounts, and cash-back options.