Financial Literacy Study Guide

Benefits available from your employer

Healthcare, paid time off, disability insurance, and matching contributions to a retirement account

Gig Economy

A flexible market that allows you to work short-term, independent jobs

Possible tax or deduction which may show up on your paycheck

Federal income tax, Contributions to retirement savings, FICA

What do you need in order to fill out your 1040

W-2, Your routing and bank number, A record of any other supplemental income

There is no relationship between the level of education received and lifetime earnings (T/F)

False

W-2

A document your employer sends you that tells you how much you've made and how much you've paid in taxes in the last year

When considering a job offer, you should only consider how much you're being paid before you accept the offer. (T/F)

False

Net Pay

The amount of money you're paid, after all taxes and deductions are taken out of your paycheck is

Good ways to track your budget

Notebook and pencil, Online software app, Envelope method

In your budgeting process, you look at recurring expenses before reviewing your wants (T/F)

True

Things to consider when creating a budget

Charitable donations, entertainment expenses, and financial goals

Bank statements, credit statements, and records of cash expenses help you to estimate your __.

Expenses

Rounding up your expense estimates to add a buffer with help ensure you don't go over your budget (T/F)

True

Benefits of using a budget

Helps keep track of money you receive, helps to prioritize your spending, helps reach short- and long-term financial goals

Unexpected expenses should be planned for (T/F)

True

Emergency Fund

Helps you prepare for unexpected expenses

What should you consider when setting a budget

Needs and wants

Going directly to a car dealer for a loan to keep things simple is a...

Not great because they typically offer higher interest rates

Using a loan could help you purchase a house (T/F)

True

What is a benefit of having a good credit score?

When you need a loan, you'll have more loan offers to pick from

To maintain a good credit score you must _____________.

Manage your debt wisely

A financial institution may offer for you to pay a little now and pay the rest after your next pay day if you are behind on loan payments (T/F)

True

Credit cards can help build credit history when paid off on time regularly (T/F)

True

If you are behind on loan payments, a realistic option is for you can ask to get out of your loan (T/F)

False

Access to investment advice is a common feature of a financial institution (T/F)

False

To avoid spending more than what is in your bank account, you should keep your own records to compare with your financial institution's records (T/F)

True

Stock

A share of ownership in a corporation.

Check cashing companies typically charge low fees (T/F)

False

If you pay your credit card balance in full each month, it will increase your credit score (T/F)

True