SSEPF1 The student will apply rational decision making to personal spending and saving choices.

1. SSEPF1 The student will apply rational decision making to personal spending and saving choices. • A. Explain that people respond to positive and negative incentives in predictable ways

2. The Truth in Savings Act is a federal law that requires banks to provide you with certain information about the accounts they offer.

3. SSEPF1 The student will apply rational decision making to personal spending and saving choices. • B. Use rational decision making model to select one option over another

5. SSEPF1 The student will apply rational decision making to personal spending and saving choices. • C. Create a savings or financial investment plan for a future goal.

6. Budget • A plan for saving, investing, and spending

7. Net Income • The amount of money you take home after taxes

8. Monthly Expenditures • Recurring monthly debts.

9. Why is budget making important? Having a budget allows you to track where your money comes from and how you spend it. By sticking to a budget, you can keep yourself out of debt, know exactly how much money you should have, and have more organized personal finance.

10. What does it mean to monitor a budget? • Make sure you don’t over spend by comparing your spending schedule to your actual spending.

11. Minimum Balance` • Amount of money required by a bank to avoid fees

12. SSEPF2 The student will explain that banks and other financial institutions are businesses that channel funds from savers to investors. • A. compare services offered by different financial institutions

13. Check register • A booklet in which you’ll record your account transactions

14. SSEPF2 The student will explain that banks and other financial institutions are businesses that channel funds from savers to investors. • B. Explain reasons for the spread between interest charged and interest earned.

15. Reconcile • To settle a debt

16. SSEPF2 The student will explain that banks and other financial institutions are businesses that channel funds from savers to investors. • C. Give examples of the direct relationship between risk and return.

17. Bounce • Writing a bad check

18. SSEPF2 The student will explain that banks and other financial institutions are businesses that channel funds from savers to investors. • D. Evaluate a variety of savings and investment options; include stocks, bonds, and mutual funds.

19. Savings Account • An account that you don’t touch, simply for saving. Typically 3% interest

20. SSEFP3 The student will explain how changes in monetary and fiscal policy can have an impact on an individual’s spending and savings choices. • A. Give examples of who benefits and who loses from inflation.

21. Interest • The cost of borrowing money

22. SSEFP3 The student will explain how changes in monetary and fiscal policy can have an impact on an individual’s spending and savings choices. • B. Define progressive, regressive, and proportional taxes.

23. How is your account balance different from your minimum balance? • The account balance is the actual amount of funds available, whereas your minimum balance is the lowest amount of funds that can be in your account before incurring a service charge.

24. Why is it a good idea to use a check register? • Carrying a check register with you allows for quick notation of all the transactions you make. It also a handy place to keep ATM and store receipts.

25. Why is having a checking account convenient for many consumers? • Safe- you don’t have to carry cash • You can write checks or use a debt card • No interest payments or fees • No minimum balance

26. What does it mean when a check bounces? • It means that the account that the check is drawn on has insuficent funds to cover it. • This can result in penalties and fees for both parties.

27. Explain why individuals should check their bank statement with their check register each month. • To make sure they are balanced

28. SSEFP3 The student will explain how changes in monetary and fiscal policy can have an impact on an individual’s spending and savings choices. • C. Explain how an increase in sales tax affects different income groups.

29. What’s the difference between a stock and bond? • A bond is a note stating that you have lent money to a company or the government and will be paid interest on that loan. In comparison, stocks represent partial ownership in a company and may offer dividends payments, although that is not guaranteed.

30. SSEPF4 The student will evaluate the cost and benefits of using credit. • A. List factors that affect credit worthiness

31. How does a dividend differ from a capital gain? • A dividend is a portion of a corporation’s profit paid to stockholders. Capital gain is the profit made by selling a stock for more than it’s purchase price.

32. Compare common stock to preferred stock. • Preferred stock earns dividends fixed at an annual rate, whereas any dividends earned by common stock are dependent on market fluctuations. • Common stock- voting rights • Preferred stock- non-voting

33. SSEPF4 The student will evaluate the cost and benefits of using credit. • B. Compare interest rates on loans and credit cards from different institutions.

34. 9. What makes a mutual fund an attractive investing option? • Mutual funds allow your money to be combined with other people’s money and managed by one group, therefore giving all the people involved more purchasing power and hopefully more profits, although that is never guaranteed.

35. 10. no because it defeats the purpose because there are penalties for cashing in a bond early.

36. 11. Commercial banks offer a wide range of services usually including checking and savings accounts as well as certificates of deposit. Savings and loan associations offer limited services (savings and loans), usually for homeowners.

37. SSEPF4 The student will evaluate the cost and benefits of using credit. • Explain the difference between simple

38. Name two types of credit and explain how they are different. • Two types of credit are loans and credit cards. They differ in that a loan is take out for a certain amount of money, with set limits for repayment, and a credit card is an open ended, or revolving, form of borrowing money and repaying it.

39. How does collateral discourage borrowers from defaulting on a loan? • Collateral is collected when a loan defaults. It discourages defaulting because the collateral on the loan is often the item that the loan paid for itself or something else of greater value.

40. How do the Equal Credit Opportunity Act and Truth in lending laws protect consumers? • Prevents discrimination based on age, gender, marital status, race, color, religion, national origin, or public assistance income when assessing credit worthiness. The truth in lending act ensures that consumers are given all information on interest rates and fees before getting a loan or credit card.

41. What are some wrong reasons for borrowing • borrowing for wants

42. What is a credit rating • Equifax - 680 • Trans Union -700 • Experian-720 • Credit score is your middle score of the three credit agencies. (700)

43. Why is it important to maintain a good credit rating? • So that you will not be charged an excessive amount of interest on a loan. • So that you can qualify for loans.

44. Why is a good idea to buy a car that has already depreciate a great deal? • Because you will be able to benefit from the ratio between the purchase price and the resale value.

45. Explain the difference between a premium, a deductible, and a co-payment? • A premium is the amount you pay each year to the insurance company. A deductible is the amount of money that you have to pay before the insurance company will start covering your losses. A co-payment is the amount of each doctor’s visit or prescription you pay out pocket.

46. Why is a policy that covers replacement cost better than on that covers actual cash value? • A policy that covers replacement cost will pay you in order to purchase a new unit, whereas a policy that covers actual cash value will only reimburse you for the value of the unit in today’s market. The actual cash value can be less than the replacement cost.

47. Why do you think some states require drivers to carry liability insurance but not collision insurance or comprehensive insurance? • Because liability covers the loss or damage of the injured party and is less expensive. Making sure that society’s loses are accounted for. States might not require comprehensive insurance because they only cover individuals and not society as a whole.

48. To protect you in the event of loss or damage to property or person.

49. Certificates of deposit • are special kinds of savings accounts that pay a higher rate of interest than do most savings accounts. CD’s offer a guaranteed rate of interest over a certain period of time.

50. APY • It is the finance charge expressed as an annual rate.