Financial Literacy Flashcard

Front

What is net worth?

Back

Net worth is the difference between total assets and total liabilities. It represents the value of an individual's or entity's financial position.

Front

How do you calculate take-home pay?

Back

Take-home pay is calculated by subtracting taxes and other deductions from gross income. For example, if you earn $4,400 and 25% is deducted for taxes, your take-home pay is $4,400 - ($4,400 * 0.25) = $3,300.

Front

What percentage of expenses is represented by a specific category?

Back

To find the percentage of a specific category of expenses, divide the amount spent in that category by the total expenses and multiply by 100. For example, if food expenses are $200 out of total expenses of $1,000, the percentage is ($200 / $1,000) * 100 = 20%.

Front

What is simple interest?

Back

Simple interest is calculated using the formula: Interest = Principal x Rate x Time. It is the interest calculated only on the principal amount.

Front

How do you calculate the total amount in an account after earning simple interest?

Back

Total Amount = Principal + Interest. For example, if you invest $2,500 at 3.5% for 5 years, the interest is $2,500 x 0.035 x 5 = $437.50, so the total amount is $2,500 + $437.50 = $2,937.50.

Front

What is a budget?

Back

A budget is a plan that outlines expected income and expenses over a specific period, helping individuals manage their finances.

Front

What is the purpose of tracking monthly expenses?

Back

Tracking monthly expenses helps individuals understand their spending habits, identify areas to save, and ensure they stay within their budget.

Front

What does it mean to invest?

Back

Investing means allocating money to an asset or project with the expectation of generating a profit or income over time.

Front

What is the formula for calculating percentage?

Back

Percentage = (Part / Whole) x 100. For example, if you have 20 out of 100, the percentage is (20 / 100) x 100 = 20%.

Front

What is a liability?

Back

A liability is a financial obligation or debt that an individual or organization owes to another party.