FCS Final Exam Study Guide PDF

Preview

Summary

Study guide with questions and answers...

Description

FCS Final Monday through Thursday-47 points graded on a curve What are values and where do we get them? Values are your views and beliefs about things. Decisions you make in college relate to your values. What are goals and the different kinds? Goals are something that you strive for. Shortterm goals are ones that you want to achieve within one year. Immediate goals are goals that you want to achieve within one month. Long-term goals are goals that you want to achieve after one year. Make your goals positive!! Goal set with SMART: Specific, Measurable, Achievable, Realistic, and Timely. How do you develop a budget? What is a budget? A budget is a spending plan that you decide upon. It is based on how much you make in income and what your monthly expenses are. By understanding your monthly income and expenses, you will be better able to manage your cash flow and determine how much debt, if any, you can assume. A key money management tool is budget. It shows you how much is coming in from jobs or loans and how much needs to go out for bills and expenses. It will help you make decisions about how you spend your money on a day-to-day basis. Without a budget, you’re making those decisions in the dark. To develop a budget, start with your income. Figure out your monthly take-home pay. That’s the amount you bring home each month after taxes and whatnot are withheld. Then, prepare a list of your monthly fixed expenses. Fixed expenses are the payments that you have to make each month, many of which are the same as your rent or mortgage payment, utilities (take an average if not budgeted), and any credit payments you have. Next, list your monthly flexible expenses may vary from month to month, but you can control them more readily than you can your fixed expenses. In other words, you can decide whether and how much you will spend on them. Flexible expenses include food, clothing, transportation, household expenses, and personal spending for entertainment, eating out, and other items that you have control over. What are needs and wants? Know the difference. Needs would be defined as goods or services that are required. Wants are goods or services that are not necessary but that we desire or wish for. In preparing a budget, it’s important to distinguish between “needs” and “wants”. You need food to live, but going out to eat costs a lot more than eating in. At the same time, going out with friends is important to your mental health. The trick is finding a balance. You need a budget that is not so strict that you are constantly breaking it, or so relaxed that you are always over-spending. Maslow’s Hierarchy of needs: Physiological, Safety, Love/belonging, Esteem, Self-actualization. What are fixed and flexible expenses? Fixed expenses are expenses that don’t change monthly. Fixed expenses are fixed so that people can budget. Also the service or product remains static and the cost doesn’t fluctuate with use. Flexible expenses are expenses that can change every month or time incurred. Flexible expenses are flexible because the service or product changes based on usage. Some fixed expenses may include; rent, car payments, Internet, car insurance, etc. Some flexible expenses include; utilities such as gas and electricity, cable TV, gas for automobiles, medicine, and doctors. What is income all kinds? Income is usually a monetary equivalent paid to you for services rendered or it could money earned or property owned. In kind income is where people volunteer their services. The work they complete is considered income for where ever they volunteer when they don’t get paid. Bartering is another kind of income.

Bartering is when you have a service or product and you trade with another person for their product or service. What is debt to income ratio? What would be considered good? You do not want more than 3 (income) to 1 (debt) out of 4 of 4. You do not have that high of a debt…housing shouldn’t be more than 1/3 of income that you’re paying. What is the difference between banks and credit unions? Banks are for profit and owned by people, stockholders that own that bank. When they’re loaning out money, that money goes as a reward check or end of the year check to the stockholders. The members of it own Credit Unions. They are the ones that make decisions and you get benefits by better interest rate or reduced/no fees. List the pros and cons of credit and debit cards. Credit cards cannot be issued to applicants younger than 21 unless they can prove they have financial means to pay the bills or a parent or another adult over 21 co-signs. There is no increase in credit limits on a card unless the co-signer approves. Pay Day loans are loans where you can borrow funds from your upcoming paycheck to be repaid when you get your paycheck. These loans highly contribute to bankruptcy. Just paying the minimum payment each month will take you years to pay off the card with interest added each month even if you don’t add any more to the balance. There are late payment fees as well. When looking for a credit card, look for a fixed interest rate. Master Card and VISA are major credit cards that are actual credit card companies. The average family carries how much is credit card debt? The average US household consumer debt for credit cards is $15,206. The average student loan debt is $32,054. Good practices for credit cards Photocopy the front and back of your card and keep that copy in a safe place in case your card or wallet is stolen. Then you have the information needed to protect yourself. This is actually a good practice to do periodically of all things in your wallet. Contact the police and credit card company if your card is stolen. Calling the credit card company will reduce your liability on a stolen card. Don’t leave your receipt in the ATM machine. How should you protect yourself from theft and fraud? Do not leave statement around for others to see, don’t loan credit card to anybody, watch where your card is going, do not give out the credit card number. What is a credit report, what’s in it, how important is it? A credit report includes your credit history. This refers to a person’s worthiness to receive credit. It consists of personal information (name, addresses, SSN, phone number, DOB, and employers), credit information (any credit you already have), banking information (any accounts you have), public records (bankruptcy or credit-related court judgment), collection information (debt that you could not pay), and credit report inquiries (people you have inquired about your credit). If you have a bad credit history you will be limited as to what purchases you can get if you have to use credit. Finance companies don’t want to offer you credit because they consider you a high risk. Credit scores range from about 350 to 900 points. The higher you score, the better. As of February 2013, the national average credit score is 750. Buying a new vs. used car or leasing—pros/cons—lemon law: If you are going to buy a used card, have a mechanic check it out, check out the prices of the vehicle with its features, purchase a used car with a warranty, check out consumer reports to see what used vehicle make, model, and years are recommended, and remember today’s cars with

proper maintenance will a lot of times last up to 200,000 miles. Lemon law is usually for vehicles, sometimes for other things. In all of the states—you may get a new brand new car, drive off the lot, constantly have problems, keep getting it fixed and serviced multiple times for a reasonable amount of time, if you keep your paperwork behind all the service and fixes, you will get a new car. If we buy a new car, we are getting a warranty with that car and the interest rate is less. Buying a used car, you may not get a warranty, the interest rate will be higher, and your vehicle has lost depreciation. Leasing a vehicle...it is yours and the companies for three to four years. You have to have full coverage insurance, must get is serviced at certain place, certain number of miles. You get a new car all of the time…nice turnaround. Kinds of auto insurance, pros and con’s: Auto insurance: full coverage covers you, your vehicle, other’s vehicle, and other person if you are at fault. PLPD is for an older vehicle. No fault insurance is something that everyone has. When you get in an accident and no one person is really at fault, each respective person’s insurance covers them. Renter’s insurance is something you can’t live without…covers anything in apartment or dorm. Can sometimes cover your car if it is sitting in the parking lot. Renter’s insurance, health insurance—reasons and kinds: Renting vs. buying a home—advantages and disadvantages, real estate agents: The advantages or renting is that it is generally easier for people who rent to move quickly. As opposed to buying there is no down payment, although a security deposit is always required. If you have pets an additional deposit is required and often times non refundable. Renters don’t face the maintenance tasks and expenses that accompany home ownership. All you need to do is contact the landlord and those repairs should be made for you. Another advantage is that the exact cost of your housing can be calculated without fluctuations for the duration of the lease. Renters often have the use of common facilities such as laundry, exercise, and recreation that can be expensive to purchase when buying a home. Sometimes it is advised that if you are moving to a new community, rent first so that you can become familiar with the area. Often times renting may be the only affordable alternative for many consumers. When you buy a home, you have more flexibility as to making the home your own. You can remodel, landscape and change your home in any way that you want to. A home also offers an investment option. This is an asset that can help in your financial future. Home ownership causes you to save because part of your monthly payments creates equity in the house. By owning a home it gives you the benefits of being able to deduct interest payments and property taxes from your income on your taxes. This is a sizeable deduction. So buying a home will provide you with the asset that you can borrow against if need be. Real estate agent’s are supposed to provide the following duties with their customers: confidence, obedience, undivided loyalty, full disclosure, and reasonable care. Real estate agents are information brokers that provide buyers and sellers with information. Houses are different form each other and “buying” information from a real estate agent can be valuable and helpful however some information can be biased so do you your homework on different real estate agents. Investing options, kinds of interest: Pensions are not that popular because companies don’t have money to fund them. IRA’s, Ross, investment options in company, Kinds of interest: based on principle, compounding (interest on top of interest on top of interest) do compounding interest early…do it when you have time. Can stay on parent’s

health insurance until you are 26. COBRA is temporary insurance when you’re not employed or don’t have a job....