Personal Finance

Supply The amount of a good or service that is available in a specific time. Best Buy has a large SUPPLY of Ipods.

I can’t wait to buy the new IPad! It’s $600 but I HAVE to have it!!! Demand The quantity of a good or service that people are willing to buy at all possible prices for a certain period of time. I can’t wait to buy the new IPad! It’s $600 but I HAVE to have it!!! I’d pay ANY price! Gosh, I hope they don’t run out before it’s my turn!

Income Money earned by a person most often by having a job Can also include salaries, wages, interests and dividends

Expenses Money you spend on a good or service

Budget A plan that helps you understand how much money you make and how much money you spend.

Credit Borrowing money to purchase goods or services in return for your promise to pay later. Buy Now, Pay Later

Credit Card The device used to purchase a good or service in order to have it now, but pay for it later.

Checking Account An account used to pay for day to day items. It has a lower interest rate than savings, but is easier to access.

Check Cards Device used to access money in a checking account. You can also write checks to access the money in the same account

Savings A bank account used to set aside money for future use. Has a slightly higher interest rate More difficult to access.

Complete the question on your notes page. Making a Decision Complete the question on your notes page.

Investing When you use money to make money! Examples: homes, stocks, bonds, mutual funds, real estate

Retirement A plan to provide economic resources for use when you no longer work. Usually not accessed until age 65. Help Mrs. Soper out by answering the question in your notes.

TEST YOUR KNOWLEDGE You need a new laptop for school TEST YOUR KNOWLEDGE You need a new laptop for school. Which is an example of effective decision making? You buy the first laptop you see at Best Buy. You buy the most stylish and sleek laptop available. You shop at several stores and choose the best laptop based on price and options. You decide to buy the hot new IPhone. Who cares about school, anyway?

A computer tech needs his car fixed A computer tech needs his car fixed. He will trade his computer skills with a mechanic in order to get his car fixed. This is an example of what economic activity?

Barter

What does this sign mean? Buy Now, Pay Later!

Buying in bulk is more economical than smaller packages! Why buy bulk? Buying in bulk is more economical than smaller packages!

Saving is the opposite of _______________ Borrowing is the opposite of ____________ Investing is the opposite of _____________

What are banks good for? Protecting your money up to $100,000 Loaning money to people for various things (cars, houses, boats, etc) Giving interest on money deposited

Principal The amount of money that is borrowed on a loan. Compound Interest Simple interest principal

Simple Interest Interest paid on the principal of a loan. Money paid on the principal (P) on a loan or investment. Caluclated using the following formula Interest rate X Principal X number of years 6% X $150,000 X 30 years

Interest on Interest paid on a loan Compound Interest Interest on Interest paid on a loan

. You are a credit advisor. Your friend Brian wants to buy a new Ipod but only has $50. What advice would you give him? Put the money in a Checking Account Put the money in a Savings Account Put the money in your sock drawer. Forget it, just get an Ipod Shuffle.

What does this mean? Assets Liabilities Net Worth What a person is really worth financially. Someone who has millions in assets but owes billions in liabilities is not a millionaire.

The property a person accumulates after all debts have been paid. Assets The property a person accumulates after all debts have been paid.

The amount of debt you have or could incur. Liabilities The amount of debt you have or could incur. If you do not spend all of the money on your credit card, can it still count against you?

Credit Report A report that lists all of your credit information. Includes all credit cards (even old ones that are not used anymore) Includes all money you have borrowed (even if you have paid it back) and the amount you borrowed Includes payment history (so, don’t forget to pay on time!) Includes all addresses that you have lived at Includes all jobs you have worked at

Bigger is BETTER!

Does the interest rate really matter? What could a few little points matter? If you were to invest $1,000 without taking any out, after 40 years you would have… At 6% $10,285 At 12% $93,050 At 18% $750,378 So, do a few little points really matter?