Personal Finance

Saving Disposable Income Discretionary Income All income after you pay taxes Discretionary Income The money you use to buy stuff you don’t need Cable, Fine Dining, Entertainment Financial Planners suggest you save at least 6 months of worth of your current salary (rainy day fund) Checking and banking accounts allow you access to your money at any time and offer very small interest rates Most banking accounts carry substantial fees Get a checking acct for your daily spending Get a savings acct for your rainy day fund (this money is harder to get to)

Debt Credit-Money you don’t have that someone lends you Collateral-Something you promise to give your lender if you don’t repay Credit Rating-Score used to determine how likely you are to pay someone back Debt-When you owe people money Bankruptcy-When you owe so much money that you can’t repay and the government forgives most of your debt (after selling off your assets) Principal-The original amount of the loan Interest-Money you pay on top of the principal to encourage people to loan you money

Good Debt? Mortgage-Loan given for a house when the house itself is used as collateral Usually considered good debt because land and house values almost always increase over time Student Loans- Loans given to college students to pay for college Cannot be forgiven if you declare bankruptcy Usually considered good debt because a college degree will make you money in the future 21,000 (Drop Out) 840K LT 30,000 (High School Diploma) 88,000 (Cost of Bachelors Degree) 37,000 (Some College) 45,000 (Bachelors Degree) 2 Mil LT 800K Difference for only 88K 65,000 (Masters Degree)

Investing (Spending Money to Make Money) Stocks-Little pieces of a company that can be bought and sold Bonds-Little loans that you give a company or government Stock Market-The place where you buy and sell stocks Mutual Funds-A basket of stocks (picked by a pro)that you can buy a share of Dow Jones-A list of stock prices that is used to gauge how the market is doing Bond Market-Place where bonds are bought and sold Real Estate-Houses, buildings etc. Precious Metals-Gold, Silver etc. Businesses-Invest in your own business or someone else's (very risky) Diversify-Don’t put all your eggs in one basket

Investing Accounts 401k-Employer sponsored retirement account that has tax advantages. The money you put in is not taxed until you retire IRA-Individual Retirement Account-Money you put in is not taxed until you retire Roth IRA-Money you put in is not taxed when you take it out Roth 401K-Money you put in is not taxed when you take out Brokerage Account-like a savings account but instead of currency you put your stocks and bonds in there