Unit 9 Personal Finance

What does personal finance mean?

• The study of how individuals make choices that satisfy their needs and wants for goods and services.

• The study of government, finance, and the flow of money

• Managing your money via budgeting and investments to make sound financial decisions for yourself and your family.

  d.

• The law-enforcing branch of the United States’ government.

What is an investment?

• A retirement account that provides an additional source of income to retirees.

• Actions taken by you/your family to proactively manage money and prevent overspending.

• Committing money to an endeavor (a business, project, real estate) with the expectation of obtaining an additional income or profit.

• The point on a graph where supply and demand meet.

What is a bank bond?

• A share of company that gives you partial ownership; over time, the value of that share goes up and you earn money.

• A ‘loan’ you give to a bank, and then collect after a certain number of years, plus interest.

• A type of savings account that earns interest based on an increasing principle.

• Any of the above.

What is a stock?

• A share of company that gives you partial ownership; over time, the value of that share goes up and you earn money.

• A ‘loan’ you give to a bank, and then collect after a certain number of years, plus interest.

• A type of savings account that earns interest based on an increasing principle.

• Any of the above.

How do debit cards differ from credit cards?

• Debit cards are associated with your bank account and work just like cash; credit cards are when banks pays a charge for you, and you to pay them back every month.

• Credit cards are associated with your bank account and work just like cash; debit cards are when banks pays a charge for you, and you to pay them back every month

• Debit cards are issues to each person on his or her 18th birthday and act as a form of ID.

• Credit cards represent a high-risk investment, where debit cards offer much lower returns at a much lower risk.

In essence, what is a credit score?

• A numerical assessment of your risk/trustworthiness.

• The national average of charges on a credit card for someone your age.

• The number of times your credit card was lost or stolen.

• A bank’s idea of how much money you should have in your account.

Johnny bought stock in Disney when he was 18. Now he’s 65, and ready to retire. He sells his shares and earns a significant amount of money, but knows he must pay taxes. What type of tax will he incur?

• Property Tax.

• Short-term capital gain tax.

• Long-term capital gains tax.

• Income tax payable to both the State and Federal government.

What is a bank statement?

• A list of all the transactions that they have on record for your account.

• A personal record of investments in stocks and bonds.

• The amount of money currently held in a savings account.

• A numerical assessment of your risk/trustworthiness.

The primary difference between 401(k)s and IRAs is that…

• 401(k)s utilize compound interest, whereas IRAs do not.

• 401(k)s are a type of retirement account, whereas IRAs are not.

• 401(k)s offer extreme flexibility, whereas IRAs do not.

• 401(k)s are employer sponsored, whereas IRAs are not.

Sally wants to start saving for retirement. She wants to self-manage her account. She does not mind paying taxes now, but she does NOT want to pay taxes when she withdraws money. What type of account is best for Sally?

• 401(k).

• Traditional IRA.

• Roth IRA.

• A standard savings account at her bank.