Personal Finance Exam Review

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Importance of Financial Literacy

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Helps people make smart money decisions, reduces chances of debt and financial stress, and encourages planning for the future, like saving, investing, and retirement.

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Money Mindsets

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Money mindset = your beliefs and attitudes about money. Common types: Spender, Saver, Avoider, Investor. Mindsets affect how you budget, save, and plan.

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Banking

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Banks and credit unions offer checking accounts for daily spending and savings accounts for saving money safely. Use debit cards to spend from checking accounts. Online and mobile banking allow access 24/7.

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Saving

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Save for emergencies, goals, and the future. Use the pay-yourself-first strategy (save before you spend). Emergency fund = 3–6 months of living expenses. Interest from savings helps grow your money.

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Budgeting

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A budget is a plan for how to spend and save money. Key parts: Income, Expenses, Savings. Helps avoid overspending and reach financial goals.

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Credit

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Credit means borrowing money to pay later. Credit score ranges from 300–850 (higher is better). Credit cards = revolving credit, pay interest if not paid in full. Use credit responsibly to build a good credit history.

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Investing

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Putting money into something (stocks, real estate) to grow wealth. Common types: Stocks, Bonds, Mutual funds. Investing involves risk but can grow your money faster than savings.

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Career Planning

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Know your skills, interests, and values. Research career options, salary, job demand, and education needed. Develop a plan: education → training → experience → job. Careers impact your income, lifestyle, and future goals.

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Paying for College

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College is expensive—plan early! Options to pay: Scholarships, Grants, Work-study, Student loans. Complete the FAFSA to get financial aid.

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Insurance

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Protects against financial loss. Types: Health, Car, Renter’s/home, Life insurance. You pay a premium for coverage.