Personal Finance Study Guide

o Define and explain the 50/30/20 rule (budgeting)

50-

o Explain compound interest and the advantages of saving for retirement at an early age

Interest on interest

o Explain the phrase “living paycheck to paycheck”

o Compare and contrast credit cards and debit cards

o Explain how inflation impacts your purchasing power

o Explain the process of tracking your ATM transactions

o Compare and contrast checking and savings accounts

o Explain FDIC insurance

o Explain advantages of online banking

o Explain direct deposit

o Calculate profit/loss of stocks (with and without dividends)

o Explain risk vs. return (investing)

o Explain diversification (investing)

o Explain how you can earn money by investing in stocks

o Explain advantages of paying more than the monthly amount on an amortized loan

o Describe the relationship between payment, principal, and interest

o Compare and contrast adjustable vs fixed rate loans

o Analyze credit card terms and conditions

o Explain the advantages and disadvantages of credit cards

o Explain credit scores and the benefits of having a high credit score

o Explain the relationship between loan term length and the monthly payment amount

o Explain the high interest and the snowball methods (paying off debt)

o Analyze credit reports and their information

o Define and explain FAFSA

o Identify the paycheck withholding that puts money into a retirement investment fund

o Calculate the surplus/deficit of a budget