State

this withholding tax percentage is deducted depending on the amount of gross pay earned
Social Security
this is the nation's retirement program
Deductions
the amount of money subtracted from the gross pay earned for mandatory systematic taxes,
employee sponsored medical benefits, and or retirement benefits
Medicare
the is the nation's health care policy for elderly and disabled
Net Pay
the amount of money left after all deductions have been withheld from the gross pay earned in
the pay period
Dependent
a person who relies on the tax payer for financial support
Payroll
this type of card electronically carries the balance of the employee's net pay
Gross Pay
the total amount of money earned during a pay period before deductions
Federal
this withholding tax is the largest deduction withheld from an employee's gross income
FICA
this includes Fed OSADI/EE or Social Security and Fed MED/EE or Medicare
IRS
they collect federal taxes, issue regulations, and reinforce tax laws written by the United States
Congress
Allowances
these are used to determine the amount of federal taxes withheld from a paycheck based on
certain characteristics
Medical
this is the amount taken from the employee's paycheck for medical benefits
Paycheck Stub
a document included each pay period which outlines paycheck deductions
Paper Paycheck
the most common method payment for employees
Regulatione
this is also known as the Electronic Fund Transfer
Pay Period
the length of time for which an employee's wages are calculated; most are weekly, bi-weekly,
twice a month, or monthly
Taxes
these are compulsory charges imposed on citizens by local, state, and federal government
Direct Deposit
paycheck money goes straight into designated account
Withholding
government keeping money from your paycheck to pay your taxes
W-4
form filled out before you start a job that tells the government how much money to take out for
taxes
I-9
employment verification form used to verify the eligibility of individuals and to avoid hiring
undocumented workers
Depository Institutions
businesses which offer multiple services in banking and finance
Commercial Bank
largest full service institutions operated under state and federal laws
Credit Union
non-profit cooperative institution owned by their members
Share Drafts
credit union checking account
Share Certificate
credit union savings account
Interest Rate
the percentage used annually to calculate the total interest either gained or lost from an account
supplied by a depository institution
FDIC
federal deposit insurance corporation is a federal government agency which insures federally
chartered commercial banks and savings and loan associated ($250,000)
NCUA
national credit union administration provides protection for credit union ($250,000)
Depository Institution Services Offered
checking and savings accounts, loans, investments, and financial counseling
Online Banking
internet banking; allows consumers to complete transactions with wireless technology; access
account information and statements; transfer funds; manage bills and apply for credit
URL Security
ends or begins in "s" (shttp or https); closed lock to the right of URL or in the bottom right hand
corner of the web
Online Bill Payment
allows consumers to send money from one account to a vender
Never Send Through Email
social security number, bank account number, or pin numbers
Recurring Payment
bills are sent to be paid on the due date or a previous date
Regulation E
covers all electronic fund transfers including transfers occuring through an electronic terminal,
computer, telephone, or magnetic tape
Privacy Policy
outlines how a consumer's information will be used and protected
Opting Out
of a financial policy allows a consumer to request a depository institution to share only a limited
amount of personal information
Saving
what people do to meet short-term goals; financially secure usually safe and money earns
interest
Investing
setting money aside for long-term goals; involves risk of loss with buying and selling; purchasing
assets with the goal of increasing future income
Delayed Gratification
giving up something now to get something better later
Opportunity Cost
what we give up to get something else
Two Difficult Reasons to Save Money
immediate gratification where we want it and we want it now; lack of education not knowing how
Some Savings Tools
savings bond, checking and savings accounts, certificate of deposit, and money market deposit
account
Checking Account
allows each purchase using money put into account; most liquid tool; less need for cash
Savings Account
holds money not being spent; account holds money for emergencies
Money Market Deposit Account
government insured account; usual minimum deposit of $1,000; account with high interest rate
of return
Certificate of Deposit
insured interest restricted access (CD); interest rate changes depending on time length of seven
days to eight years; early withdrawls equals PENTALTY
Savings Bond
cost 50% of the face value from the US government; tax exempt for college expenses; purchase
for $25-$10,000
Compound Interest
the idea of earning interest on interest;
A=P(1+i)to the N power {A is the amount in the account, P in the principle, i is the interest rate
expressed as a decimal, N is the number of years compounded}
Rate of Return
total return on an investment expressed as a percentage of the amount of money invested
Rate of Return Formula
total return (capital gain or loss) divided by amount of money invested (principle) equal rate of
return (expressed as percent and can be negative)
Investment Risk
uncertainty about whether you will make or lose money
Inflation Risk
risk that inflation will lower the value of your money
Rule of 72
allows a person to easily calculate when the future value of an investment will double the
principal amount; rule is only an approximation
Rule of 72 Formula
72 divided by interest rate (not in decimal) equals number of years needed to double the
principal investment
How to Beat Inflation
find higher interest rate then the inflation rate
3-6 Months
how much living expenses you should have saved before you begin to invest
Financial Risk Pyramid
risk and potential return increases from: security (base), wealth accumulation (middle), to
speculative (top)
Lower Risk Tolerance
the idea of losing money bothers you more, need to try to take more risks to build long-term
wealth
Higher Risk Tolerance
be careful not to put all of your money in high risk investments that put your wealth at risk, need
to be intentional about putting some money in lower-risk savings
Stocks
an investment tool that involves a share of ownership in a company; if the company makes a
profit, dividend are paid to shareholders; market price of the stock is based on supply and
demand; historic annual gains are over 10%
Bonds
an investment tool that is not truly invest, more like saving but are not FDIC insured; leading a
company money; has a set interest rate
Mutual Funds
an investment tool that combines many types of stock into one package (like a gift basket); fees
can be high, but requires low maintenance; historic annual gains are 8-10%
Index Funds
an investment tool that involves a mutual fund with lower fees because it is easier to manage;
the fund includes stocks of companies that are within a certain category (technology, oil,
fashion, etc.); examples is the Wilshire 5000 which includes the largest 5000 companies in the
United States
Real Estate
residential or commercial property; risky and time-consuming; very illiquid
Speculative Investments
collectibles; high risk - requires a willing buyer of often obscure products
Portfolio Diversification
don't put all of your eggs in one basket; let the good balance out the bad
Investment Philosophy
each person has a tolerance level for the amount of risk they are willing to take on; what is your
tolerance risk? - low, moderate, or high
Credit
when goods, services, or money is received in exchange for a promise to pay a definite sume of
money at a future date
Credit Card
pre-approved credit which can be used for the purchase of goods and services now and
payment of them later
Closed-End Credit
one-time loan; purpose specified in application; specific number of equal payments; amount
agreed upon during application process (mortgages, automobile, education loans)
Open-End Credit
credit extended in advance; may be used for a variety of purposes; payment vary; amount may
be increased for responsible consumers (credit cards)
APR
annual percentage rate at which interest is charged on a credit card account each month
Credit Report
a record of consumer's credit history that includes information about credit cards use as well as
the use of other types of credit, such as auto loans, student loans, and mortgage loans
Credit Score
mathematical tool created to help a lender evaluate the risk associated with lending a consumer
money; based upon information in the credit report; numeric grade - high number is good
Credit Card Safety Tips
sign the back with a signature and "Please See I.D."; do not leave cards lying around; never
give out account number unless making purchases; a lost or stolen credit card should always be
reported immediately
Credit Reporting Agencies
equifax, transunion, and experian keep a record of consumer's credit transactions
4 Categories for a Credit Report
personal information (name and alliases, SSN, etc.), account summary (date account was
opened, payment history, etc.), public record items related to credit (legal suits, bankruptcy,
forclosures, etc.), and credit inquiries (request for credit reports, soft and hard checks, looking
for credit, etc.)
Identity Theft
is when personal information is stolen and used to commit fraud with your credit
Stolen Identity
need to place a fraud alert on your credit report; close accounts; file a police report; and contact
the FTC
Prevent Identity Theft
avoid carry SSN on anything in your wallet; shred financial documents; never give out personal
information on the phone or internet unless you know who you are dealing with
Payday Loan
short-term loan providing immediate cash; can be in the risky form of an internet lender where a
person will be required to give the lending company access to financial accounts as well as a
SSN
Risk Management
how you deal with the chance of a potential personal or financial loss
Insurance
means of guaranteeing your financial protection against various risks
Premium
amount you pay each month in insurance; simply the amount you pay for an insurance policy
Coverage Limit
maximum amount the insurance company will pay if you file a claim
Deductible
amount of a loss you must pay out of your own pocket before the insurance company will step in
and pay the rest
General Liability
required by law; covers damage you cause to other people's property and bodily injuries you
cause to people outside your car