Financial Literacy Reflection

1. What are the costs and benefits of credit, such as loans and credit cards?
-Credit comes with costs that have to be paid off. Certain types of credit have different types
of payments to be made. Open-end credit has a recurring payment each month versus
closed-end credit that is paid back in large amounts over an extended period of time. Credit
cards have expenses to be paid each month in order for a person to continue using them.
They are beneficial because they are efficient and easy to manage. Loans are beneficial
because they allow you to make large purchases such as on a car or home without needing
the full amount of money right away. They allow you to pay off the expense over time.
However, loans are not given to anyone; the bank has to see that you are not a risk and that
you have the financial capability to pay off the loan.

2. How can you use credit responsibly to achieve your financial goals?
-I can use credit responsibly by managing my credit wisely. I can do this by minimizing the
amount of debt I owe, by being knowledgeable about my rights, and building a good credit
history.

3. What taxes do citizens pay and how are they calculated?

-Citizens pay multiple different kinds of taxes such as income, property, sales, and federal
taxes. Income taxes can be either federal, state, or local and those are calculated based on
the amount of money you make. The more money you make the more you will pay in taxes
and vice versa. Property taxes are calculated based on the value of the property you are
purchasing. Sales tax is placed on any good or service you purchase and is calculated based
on the cost of the purchase. Forms such as the W-4 and W-2 determine how much you will
be taxed according to the IRS.

4. How can insurance help protect your financial future?

-Insurance offers protection from the costs of unplanned events such as car accidents or
terminal illness. Insurance helps to manage financial risks which protects your financial
future. With insurance there is support when unexpected things occur that come with hefty
costs. Insurance allows you to share your risk with your insurance provider and receive help
during incidents.

5. How does setting goals and budgeting help you achieve financial success?
-Setting goals and budgeting allows you to determine your goals and help you visualize
achieving them. Budgeting helps you decide how and when you will spend your money and
when it is needed vs not needed. Budgeting and setting goals is imperative to achieving
financial success because it allows you to save and prioritize goals.
6. How do maintaining healthy finances affect your overall physical and emotional health?
-Maintaining healthy finances allows you to have peace of mind. When you are constantly in
a state of worry regarding your finances you are never at ease. This takes a toll on your
physical and emotional health. Worrying about finances can cause you to over work yourself
and can cause a lack of sleep. Not only does maintaining healthy finances ensure financial
stability but also physical and emotional stability, health, and prosperity.

7. What is your plan to develop healthy financial practices? Discuss three ways that you plan
to make healthy financial decisions to protect your future.
-My plan to develop healthy financial practices starts with identifying my main monthly
expenses. Once I know how much money I need to pay for expenses each month I can
determine how much money I have for spending. I plan to make healthy financial decisions
such as spending only when necessary, creating a monthly meal plan, and using automatic
set aside money to be taken from my bank account.