Midterm_Financial Literacy

Front

What is a fixed expense?

Back

A fixed expense is a cost that does not change from month to month, such as rent or car payments.

Front

According to the 50/30/20 rule, what percentage of your income should be allocated to savings or debt repayment?

Back

20% of your income should be saved or used to pay off debt according to the 50/30/20 rule.

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What is a 401(k) match?

Back

A 401(k) match is an employer contribution to an employee's 401(k) plan that is based on the employee's own contributions.

Front

How does a positive credit history affect interest rates?

Back

A positive credit history typically results in lower interest rates on loans and credit.

Front

What can positively affect your credit history?

Back

Paying bills consistently and on time can positively affect your credit history.

Front

What is a variable expense?

Back

A variable expense is a cost that can change from month to month, such as groceries or entertainment.

Front

Define the term 'credit score'.

Back

A credit score is a numerical representation of a person's creditworthiness, based on their credit history.

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What is the purpose of a budget?

Back

A budget is a financial plan that helps individuals track income and expenses to manage their finances effectively.

Front

What is the difference between a 401(k) and a 403(b) plan?

Back

A 401(k) plan is offered by private-sector employers, while a 403(b) plan is offered by non-profit organizations and public schools.

Front

What does it mean to diversify investments?

Back

Diversifying investments means spreading money across different asset classes to reduce risk.