![Page 1: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/1.jpg)
Chapter 3• 1) What is the first step in money management?
– Organize your financial documents
• 2) What are two benefits to having your financial documents organized?
• Helps you find your documents quickly • Plan and measure financial progress• Handle routine money matters• Determine how much money you will have now and in
the future• Make effective decisions about how to save money
![Page 2: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/2.jpg)
Chapter 3• 3) What types of documents should you NOT keep in a home file? – Mortgage loan papers– Car/house titles– Will
• 4) Why should you not keep hard to replace documents in a home file?– No protection against water, theft, or fire
![Page 3: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/3.jpg)
• 5) What are two advantages to using a home computer to help organize and keep financial information?
• Use software programs to automatically calculate new balances• Make payments online• Track and see how much money you are spending• Compare expenses from month to month• Generate personal financial documents
• 6) Describe or define liquid assets– Cash and items quickly converted into cash
Chapter 3
![Page 4: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/4.jpg)
• 7) Describe or define real estate– Land with any structures on it
• 8) Describe or define personal possessions– Cars or any valuable items (jewelry, motorcycles, boats)
that are not considered real estate
• 9) Describe or define investment assets– Retirement accounts, stock, bonds
Chapter 3
![Page 5: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/5.jpg)
• 10) Explain how a person can have high net worth, yet still have trouble paying bills– They have a lot of assets (not easily converted to cash), but
do not have enough income coming in to pay for expenses
• 11) What is discretionary income?– Income left over after all bills and debts have been paid
• 12) Give two examples of a fixed expense– Mortgage or car loan, cable, rent
Chapter 3
![Page 6: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/6.jpg)
• 13) Give two examples of a variable expense– Electricity, gas bill, medical bills, entertainment, recreation
• 14) What are two ways that you can increase your savings plan?
• Pay yourself first• Use payroll savings deduction• Spend less
Chapter 3
![Page 7: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/7.jpg)
Chapter 5• 15) Which one of the following is not one of the
main categories of financial services that financial institutions offer?
• Savings• Insurance Services• Payment Services• Borrowing
• 16) What is a main benefit to direct deposit?• Saves time, money, effort, and safe way to transfer money
• 17) True or False: Credit unions are in business to make a profit
• False, commercial banks are
![Page 8: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/8.jpg)
• 18) What are least two things you should ask yourself when comparing banks and other financial institutions
• 19) When talking about CDs, what does the word term mean?
• Length of time you deposit your money in
• 20) When talking about CDs, what does the word maturity date mean?
• When the money becomes available to you
![Page 9: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/9.jpg)
• 21) True or False: You will pay a penalty if you remove money from your CD early
• True
• 22) True or False: The easiest way to find thebest CD rates is to look in the newspaper
• False, use the Internet
• 23) True or False: When a CD rolls over, the money is redeposited for 3 more years
• False, only for 1 year
• 24) What are the two advantages of having a CD portfolio?• You can draw out at various times because the CD dates are staggered• You get better interest on CDs than savings accounts
![Page 10: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/10.jpg)
• 25) What are two advantages of having a regular savings account?• Liquid • Require little or no minimum balance
• 26) True or False: The more your money is compounded the more money will grow
• True
![Page 11: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/11.jpg)
• 27) When choosing a savings plan, liquidity if very important so you can get your money
when needed. When high interest rates more important than liquidity when making a choice?
• When you are planning for the long-term growth
• 28) Know the three types of checking accounts• Regular checking account• Activity accounts• Interest earning accounts
• 29) Know what type of checking account charges for writing checks and making deposits
• Activity checking account
![Page 12: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/12.jpg)
• 30) What factors should you consider when evaluating checking accounts
• 31) Which one of the following is the most common restriction you will run into with checking accounts
• Keeping a minimum balance• How many checks and deposits you can make in a month
• 32) Name two various fees and charges a person may have to pay with a checking account
• Monthly service charge, check printing, overdrafts, stop-payment orders
• 33) Overdraft protection means the bank automatically transfers funds into your account if you overdraw your checking. What does this protect you from?
• Fees charged to you for bouncing check
![Page 13: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/13.jpg)
Chapter 8• 34) What type of goal should a savings or investment
plan start with?• Specific and measurable
• 35) True or False: Riskier investments have a lower rate of return• False, higher
• 36) True or False: Speculative investments have low rates of return because you can lose your money at any time
• False, high because you can lose your money at anytime
• 37) True or False: The disadvantage of a speculative investment is that you have a low rate of return
• False, disadvantage is that you can lose your money at anytime
![Page 14: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/14.jpg)
• 38) Be familiar with the five components of risk?– Inflation
• Return may not keep up with rapid inflation– Interest Rate
• Fixed rates may hurts you is outside rate rise– Business Failure
• Lose money on stocks/bonds when business is bad– Financial Market
• Could be affected by social and political conditions– Global Investment
• May be risky, keep in mind economics and political stability
![Page 15: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/15.jpg)
• 39) Give one investment that is a safe, dependable source of interest income– Savings accounts, CDs, US savings bonds, US treasury bills
• 40) Give one investment that is not guaranteed to offer an income– Real estate or rental property, REITS
• 41) Give one investment that offers little potential for income– Precious metals and gems, collectibles, commodities, options
![Page 16: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/16.jpg)
• 42) What is the main advantage of common stock?• Voting rights
• 43) What is the main advantage of preferred stock?• Get paid dividends before common stock holders
• 44) What are the two main benefits of a mutual fund?• Professionally managed• If one mutual fund has losses, another may have gains
• 45) What are two possible goals someone investing in real estate is trying to achieve?
• Sell after it rises in value• Get rental income
![Page 17: Chapter 3 1) What is the first step in money management? – Organize your financial documents 2) What are two benefits to having your financial documents](https://reader036.vdocument.in/reader036/viewer/2022082611/56649dff5503460f94ae8211/html5/thumbnails/17.jpg)
• 46) Know the difference between tax- exempt and tax-deferred incomes– Tax exempt means it is not taxed– Tax-deferred mean you pay no taxes until you collect money