Financial Literacy

What is saving?

• Accumulation of excess funds by intentionally spending less than you make

• Cash set aside to cover the cost of unexpected events

• A monetary asset that contributes to your net worth

• Money available today that is worth more if received in the future

What is emergency savings?

• Transferring money into your savings before you pay your bills

• Original amount of money saved or invested

• Cash set aside to cover the cost of unexpected events

• Maximizing your return by selling stocks at a higher price than what you paid for

When is an item considered an asset?

• While you are making monthly payments on time

• Converting an asset into cash

• When cash is used for emergencies

• When it is fully paid off and can be sold for cash

How much money should you save for emergencies?

• 2 months worth of expenses

• 6 months worth of expenses

• Cash in whatever stocks you have to pay for an emergency

• As a neighbor for a loan if needed

How does time effect money?

• The more money you save the more you will make

• Saving for a short period of time proves long term investments

• The longer you save your money the more you will make

What is investing?

• Possibility that an investment will fail to pay the expected return

• Money invested is usually used to pay for long-term goals

• Assets purchased with the goal of providing additional income from the asset itself but with the risk of loss

• The danger that money won’t be worth as much in the future as it is today.

Stocks are:

• A share of ownership in a company

• Organization pays interest to the lender

• Form of lending to a company or the government

• A specified time in the future when the principal amount of the bond is repaid to the bondholder

What is a bond?

• A share of profits distributed in cash to stockholders

• A share of ownership in a company

• When an organization pays interest to the lender (purchaser) until the maturity date is reached

• A Form of lending to a company or the government

Investments are important to building:

• For emergencies

• For your future net worth

• A trade-off to higher returns is lower liquidity and higher risk

• Tax-advantaged investments

Money invested is usually used to pay to:

• Achieve long-term goals

• For emergencies

• To purchase expensive items

• To pay off loans