Flashcards on Personal Finance

Click on the flashcard to see the answer


What is the difference between a debit card and a credit card?

Debit cards withdraw money directly from your bank account while credit cards allow you to borrow money that you must pay back with interest.

What is a budget?

A budget is a plan for how you will spend your money over a certain period of time.

Why is it important to save money?

Saving money can help you prepare for unexpected expenses and achieve your financial goals.

What is the difference between a checking account and a savings account?

A checking account is used for everyday transactions while a savings account is used for saving money and earning interest.

What is the difference between gross pay and net pay?

Gross pay is the total amount of money you earn before taxes and deductions while net pay is the amount of money you take home after taxes and deductions.

What is a credit score?

A credit score is a number that represents your creditworthiness and the likelihood that you will pay back debts on time.

What is a credit report?

A credit report is a summary of your credit history, including your credit accounts, payment history, and outstanding debts.

What are some common types of investments?

Some common types of investments include stocks, bonds, mutual funds, and real estate.

What is the difference between a Roth IRA and a traditional IRA?

A Roth IRA is funded with after-tax dollars while a traditional IRA is funded with pre-tax dollars. With a Roth IRA, you pay taxes upfront but can withdraw money tax-free in retirement, while with a traditional IRA, you get a tax deduction upfront but pay taxes on withdrawals in retirement.

What is compound interest?

Compound interest is interest that is earned on both the principal amount and any interest that has already been earned.

What is a 401(k) plan?

A 401(k) plan is a retirement savings plan that is sponsored by an employer and allows employees to contribute a portion of their pre-tax income to the plan.

What is a stock?

A stock is a share in the ownership of a company and represents a claim on part of the company's assets and earnings.

What is a bond?

A bond is a debt security that represents a loan made by an investor to a borrower, typically a company or government.

What is a mutual fund?

A mutual fund is an investment vehicle that pools money from multiple investors to purchase a diverse portfolio of stocks, bonds, or other assets.

What is diversification?

Diversification is the practice of spreading your investments across a variety of assets to reduce risk.

What is the difference between a debit card and a credit card?

Debit cards withdraw money directly from your bank account while credit cards allow you to borrow money that you must pay back with interest.

What is a budget?

A budget is a plan for how you will spend your money over a certain period of time.

Why is it important to save money?

Saving money can help you prepare for unexpected expenses and achieve your financial goals.

What is the difference between a checking account and a savings account?

A checking account is used for everyday transactions while a savings account is used for saving money and earning interest.

What is the difference between gross pay and net pay?

Gross pay is the total amount of money you earn before taxes and deductions while net pay is the amount of money you take home after taxes and deductions.

What is a credit score?

A credit score is a number that represents your creditworthiness and the likelihood that you will pay back debts on time.

What is a credit report?

A credit report is a summary of your credit history, including your credit accounts, payment history, and outstanding debts.

What are some common types of investments?

Some common types of investments include stocks, bonds, mutual funds, and real estate.

What is the difference between a Roth IRA and a traditional IRA?

A Roth IRA is funded with after-tax dollars while a traditional IRA is funded with pre-tax dollars. With a Roth IRA, you pay taxes upfront but can withdraw money tax-free in retirement, while with a traditional IRA, you get a tax deduction upfront but pay taxes on withdrawals in retirement.

What is compound interest?

Compound interest is interest that is earned on both the principal amount and any interest that has already been earned.

What is a 401(k) plan?

A 401(k) plan is a retirement savings plan that is sponsored by an employer and allows employees to contribute a portion of their pre-tax income to the plan.

What is a stock?

A stock is a share in the ownership of a company and represents a claim on part of the company's assets and earnings.

What is a bond?

A bond is a debt security that represents a loan made by an investor to a borrower, typically a company or government.

What is a mutual fund?

A mutual fund is an investment vehicle that pools money from multiple investors to purchase a diverse portfolio of stocks, bonds, or other assets.

What is diversification?

Diversification is the practice of spreading your investments across a variety of assets to reduce risk.

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