Personal Finance QUIZ REVIEW – CREDIT CARDS, BANK ACCOUNTS, BUDGETING, ETC.

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Presentation transcript:

Personal Finance QUIZ REVIEW – CREDIT CARDS, BANK ACCOUNTS, BUDGETING, ETC.

Car Buying  Don’t spend more than half your annual income  Longer term loans mean paying more in finance charges  Longer term loans mean lower car payment  Typically, new car depreciate 0-13% when you drive off the lot

Housing  Don’t spend more than 1/3 of your monthly take home on rent/housing payment  Normally, if you plan to stay in the same area for more than 3 years, you might consider buying a house v. renting  Also consider the rental market when buying a home. Strong rental market might mean buying a house to lower housing cost

Credit Cards  The FICO mortgage score is between 300 and 850. Higher scores indicate lower credit risk. Each individual actually has 49 credit scores for the FICO scoring model because each of three national credit bureaus, Equifax, Experian and TransUnion, has its own database.  FICO Score based on;  On-time payments  Capacity used  Length of credit history  Types of Credit Used  Past Credit Applications

Budgeting  A budget is based on estimated cash inflows and outflows.  Examples of fixed expenses include rent, insurance, and car payments.  Financial planning is an informal process that focuses on what will happen in the future.  Discretionary income is the amount of money a person has to spend after needs are met is called.  An asset is property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.  A liability is defined as an obligation of an entity arising from past transactions or events, the settlement of which may result in the transfer or use of assets, provision of services or other yielding of economic benefits in the future.

Budgeting  The opportunity cost is the value of what you give up (when you make a choice).

Checking Account  A checking account is a form of demand deposit.  Understand: ATM, APR, Automatic Withdrawal, Restrictive Endorsement  FDIC insures some bank accounts up to $100,  What’s need to start a checking account?

Saving Account  A savings account is a demand deposit that may have some restrictions on how quickly or easily the money can be withdrawn.  How does a CD work?  How are CD different from Money Market Accounts?