When you go to a bank or credit union to borrow money, it’s going to cost you as well. Read on to understand how interest works and how to make it work for you!
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Money Management
Money Management
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A rewards debit card is a type of debit card that offers incentives or rewards each time you use it. Similar to rewards credit cards, these debit cards allow you to earn points, cash back, or miles for your purchases.
An emergency fund is a source of funding on which you can rely when life throws you lemons. It is a cash reserve that you allocate strictly for when unexpected, costly and urgent issues arise. Such issues do not include dire wants, such as a new television or a pair of shoes but rather, true emergencies.
Checking your credit score is a relatively easy thing to do. Without having to go too far, you can check your credit card or loan statement. Many credit card companies and lenders have begun to add your credit score to your statement for your reference.
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Building a strong credit score is an essential step towards financial health. Here are 7 tips that will help build your credit score so you can get better interest rates for loans and credit cards, increase your credit limit, and even make it easier to rent an apartment or secure a job.
Money Management FAQ's
Financial literacy is possessing knowledge and skills pertaining to financial matters, such as budgeting, debt, saving and investing. To be financially literate is to have a strong grasp and understanding of the relationship between income and expenses.
Personal finance is how you manage your money. This includes anything you might do with your money from spending and saving to budgeting, incurring debt through loans and credit cards, investing, insurance and even retirement planning.
Debt is money that was borrowed and is now owed to another individual or an entity. You might borrow money to buy a house, pay for college or buy or a car. Applying for and using a credit card is another form of debt.
A budget is a plan on how you intend to spend your money. It takes into account all your incoming sources of money and all your expenses (required and discretionary). Sources of money will primarily comprise of your paycheck but could also include money from other sources such as investments or other efforts generating cash, such as a side hustle.
Inflation put simply is a rise in prices. Over time, your money will not have the same amount to purchase power as it once did.
An asset is a current, fixed, financial, or intangible resource that possesses value and is owned by an individual or group.
A budget is a plan on how you intend to spend your money. It takes into account all your incoming sources of money and all your expenses (required and discretionary). Sources of money will primarily comprise of your paycheck but could also include money from other sources such as investments or other efforts generating cash, such as a side hustle.
The best way to start a budget is to take stock of your money coming each month and the expenses you incur monthly. By accounting for these items, you can see the difference between your income and expenses and determine if there is an overage or shortage of money each month.
Fixed expenses are expenses that cost the same each time you pay, most likely monthly or annually. Your rent, during the duration of your lease, will be a fixed expense. The money you pay each month will always be the same (assuming no additional fees are charged – such as a late fee).
A check is a document that is written, dated and signed that instructs a bank to give a specific sum of money to the person or entity noted on the check. The check has your account number written on it so the bank knows where to find the money and can make sure you have enough money in our account to send.
A W-2 is an Internal Revenue Service (IRS) tax form employers are required to use to report an employee’s wages (cash, cash equivalent & taxable benefits) if they are least $600 or more and tax information including federal and state income taxes in addition to social security and Medicare tax.
Income tax is a tax imposed by the government on income earned by individuals and companies. The amount of taxes to be paid is determined by the amount of an individual’s annual income.
To open a savings account your need to determine which bank or credit union you want to have your account with. Consider number of locations & ATM’s, the interest rate offered and any fees you will or could be charged.
An HSA (Health Savings Account) is a type of savings account designed to be used for qualified medical expenses. You can contribute money pre-tax out of your paycheck and use the money for approved expenses without any tax penalty.
A savings account is an account you open with a bank or credit union, where the bank holds your money for you. In exchange for giving your money to the bank to hold (and use while they are holding it) the bank will pay you interest.
The answer to this question is “it depends.” If you’re looking at saving money each month on the amount of your student loan payment, you will likely be able to reduce your monthly obligation by extending your repayment term. However, extending your repayment term may cost you more overall in interest paid over time, but can help to reduce your monthly expenditures.
Compound interest is when you earn interest on the money you previously earned in interest, when that money is added to your initial deposit. For example if you deposit a $1000 in a bank paying a 5% annual interest rate and left it there for 10 years, when you go to collect your money you would have $1629.
A CD (Certificate of Deposit) account is a type of savings account you can open at the bank. When you open a CD account you agree to leave your money in the bank for a specified time period.
A check that “bounces” is a check that is returned for insufficient funds. If you write a check for $100 but only have $80 in your checking account, you have insufficient funds to cover the amount the check is written for. Some banks will charge over-draft fees when this occurs.
Debt is money that was borrowed and is now owed to another individual or an entity. You might borrow money to buy a house, pay for college or buy or a car. Applying for and using a credit card is another form of debt.
Debt consolidation is the process of bundling your various debts into a single debt. This might involve bundling loans together or borrowing a new loan to pay off credit cards and other debts such as a personal or car loan.
The two most common types of debt are secured and unsecured. Secured debt is typically backed by collateral (an asset that possesses value). The lender has a lien on the collateral (they can take the asset) as an assurance of some repayment should you fail to make payments.
The expression of “getting into debt” typically refers to when you borrow more than you can afford to repay on time or even pay off. This will make it difficult to maintain minimum monthly payments and could cause you to juggle which debts you choose to pay each month.
To begin getting out of debt, it is a good idea to list out all your debts. Make sure to include student loans, car loans, mortgage (if you have one), any other loans, accounts that are in collections, and outstanding credit card debt.
FICO® scores 670 or higher is when you are considered to have good credit, while scores higher than 740 putting you in the very good range and anything over 800 is considered Excellent.
Your credit report is compiled and shared by three major reporting agencies, Equifax, Experian, and TransUnion.
If you have a late payment, it will appear on a credit report for seven years (or seven years from the delinquency date).
Every 12 months you can receive a free copy of your credit report from each of the major credit reporting agencies, Experian, TransUnion, Equifax from annualcreditreport.com where you will be asked to complete a form online and pick the report(s) you want to see.
The three major credit bureaus, Experian, TransUnion, and Equifax collect your financial history information and present them in a report that shows your current accounts as well as your account history and other pertinent financial information.
Creditworthiness is the basis of a person or company to reliably repay money back.
Stock market is the term that represents marketplaces, more specifically exchanges, where stocks and other financial securities are bought and sold.
A stock is an investment that represents a fraction of ownership in a company.
The Dow Jones, Nasdaq and S&P 500 are stock market indices that track a specific group of stocks.
A mutual fund is an investment that pools together money from different investors to buy investment assets such as stocks, bonds and other securities.
A bond typically issued by a company or government, uses investor’s money to raise money to fund day-to-day operations or other projects and the investor is paid back the initial investment (the face value of the bond) on the maturity date plus periodic interest payments.
An asset is a current, fixed, financial, or intangible resource that possesses value and is owned by an individual or group.
A recession is when there is a significant downturn across many different industries that results in negative economic activity.
Inflation put simply is a rise in prices. Over time, your money will not have the same amount to purchase power as it once did.
Insurance is a way to protect yourself against unforeseen negative life events, such as theft, car accident, fire, death, or flood.
Identity theft is when someone maliciously takes your personal information with the intent for financial gain without your knowledge or consent.
Fraud is type of deception used with the intention of financial or personal gain.
Renters insurance (also known as tenant insurance) helps you cover unexpected events such as damages, theft, or accident that may occur at the residence you are renting.
Money Management
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