sources of income - ✔✔ wages, rentals, interest, capital, profits, investments, entrepreneurship
exemption (aka allowance) and how does it work -
... [Show More] ✔✔ allowance is used to reduce amount of taxed income. personal exemptions are given for people with dependents or spouses. company exemptions are given for non-profits, religious organizations, and government corporations.
liquidity—what does it mean? what products are liquid? - ✔✔ liquidity is the degree in which assets can be sold. cash on hand or in banks, stocks (shareholders own part of a company and can earn money through its profits), bonds (government pays off their "debt" to you by issuing fixed income+interest to bond holders), and mutual funds (pooling money with other investors to invest in companies and produce a greater profit with less risk)
gift cards and how they work (a monthly inactivity fee may begin after 12 months) - ✔✔ a prepaid debit card that grants the user a specific amount of money for purchasing. closed loop system: credit for a specific business. open loop system: essentially a debit card- can be used as long as the card brand is accepted at the establishment (i.e., visa, mastercard, discover, american express, etc).
discretionary income or budget surplus - ✔✔ not allocated for food or shelter; can be spent on "non-essential" items (clothes or electronics)
money orders (high rate of counterfeits) - ✔✔ a money order is a payment order for a pre-specified amount of money and is purchased at different types of stores- it is used like a check. they are usually limited in maximum face value to some specified figure (for example, the usps limits domestic postal money orders to the united states to $1,000.00. united states postal money orders are hard to counterfeit.)
why u.s. currency has value - ✔✔ there is a belief that money has value and therefore is accepted
opportunity cost - ✔✔ next best alternative- it is what is given up when a choice is made
who is the most hurt and the least hurt with inflation - ✔✔ most hurt are lenders (banks) bc the money they loaned out has less purchasing power and people living on fixed income bc the money has less value. least hurt are those who owe large amounts of money bc the amount they owe becomes less valuable.
role of the u.s. treasury department - ✔✔ collects taxes, prints money, issues treasury bonds
pay yourself first - ✔✔ automatically route money from paycheck to savings (before paying bills)
cd (certificate of deposit): what is it and what happens if you cash it before maturity - ✔✔ it is a time deposit offered at financial institutions- penalty if cashed before maturity; this can be beneficial because it boosts the amount of interest on a deposit
institutions that give loans - ✔✔ banks, credit unions (borrow from pooled deposits at low interest rates), pawnshops, finance companies, payday lenders (high interest loan that is payed through the borrower's next payday), and tax preparers (they can help you loan from your future tax refunds)
which institution(s) charge the highest interest rates on loans - ✔✔ pawnshops, payday lenders, tax refund lenders, and finance companies
what is a credit union and the advantage of using a credit union - ✔✔ member owned co-operative financial institution- advantage is lower interest rates on loans
overdraft protection (opt in regulation) and how it works - ✔✔ overdraft protection is a feature offered by banks to keep your checking account from over-drafting. the bank prevents check, atm, debit card transactions, and electronic/wire transactions to avoid the person's bank account balance falling below zero and triggering the overdraft fee.
compound interest - ✔✔ interest added to the principal- interest earned on interest
time value of money - ✔✔ is calculated by value of money with given amount of interest earned over a period of time; the longer the time you keep your money invested, the more interest you will earn
liquid financial products vs. products that are less liquid - ✔✔ savings and checking accounts are most liquid, certificate of deposit and money market accounts are less liquid
rule of 72 - ✔✔ how long (many years) will it take to double an investment? divide 72 by the interest rate to be earned: 72 divided by 3% interest = 24 years (if you are given the number of years and need to determine the interest rate needed to double your money, then divide 72 by the given number of years: 72 divided by 24 years = 3% interest). [Show Less]