1. Unit 7 Review:
Personal Financial Literacy
By Kaylee Saaranen, Nina Wilder, and Emiley Burriss
2. A budget is a plan for how an individual, family, or
organization will raise and spend money.
Steps for creating a budget:
1. List fixed costs that you will have for the
month
2. Estimate variable cost based on experience
3. Set aside amount you want to put away or
save each month as soon as you get paid
4. List large purchases you plan to make later
on and set aside money
Monitoring your spending is important so that you can make
smart changes to your budget over time.
3. Different Types of Accounts
• home account: keep money in piggy bank
at home (risky)
• Checking account: money kept in bank
where you can write a check, use debit
card, or withdraw cash
• Savings account: money put in an
account with withdrawal fees
• Certificates of deposit (CD’s): consumers
agree not to withdraw money for a
specific time
• Individual retirement accounts (IRA’s):
money for retirement; usually in stock
market
4. Debt is money you owe to
creditors for purchases you
make
Having debt is not always
bad if the consumer can pay
it off over time
5. Credit Cards
• When credit cards are used to
purchase they are taking out a small
loan
• Using credit requires user to pay
interest (money charged for credit)
• Shop around for the best interest
rate, lower is better
• More likely to get lower rate if you
have a good credit score/history
6. Building Wealth
• Put money in savings or CD’s: will grow slowly
but guaranteed return
• Buy US gov.t bonds and treasury bills: give
gov.t money but guaranteed return + interest
• Buy a home: gains value
• Invest in stock market: very risky and no
return guarantee
7. Ways to make money on stock:
1. Dividends: piece for
company’s profit for
owning shares in that
company
2. Capital gains: selling stock
for more than you bought
it for
8. Insurance Terms To Know:
• Insurance – when a company provides
a guarantee of compensation for a
specified loss, damage, illness, or
death in return for payment
• insurance agent- person who sells and
manages insurance policies
• Claim- a demand made by the insured
or their beneficiary for payments
provided by the policy issued
• Deductible- the amount of money the
person must pay out of pocket before
the insurance kicks in
9. Types of insurance
Health : provides for medical care, doctor
visits, prescriptions, rehabilitation, etc.
Life: pays money to beneficiaries upon
death of the insured to cover death
expenses and for lost income due to
death
Automotive: in case of car accident it will
pay for medical expenses of those injured
and property damage
Home owner/renter insurance: provides money for
personal property and structural damage or theft
10. The government protects consumers from unsafe
and fraudulent business practices:
• Federal Trade Commission (FTC)
• Consumer Product Safety Commission (CPSC)
• Food and Drug Administration (FDA)
• Federal Communication Commission (FCC)
• Bureau of Alcohol, Tobacco, Firearms, and
Explosives (ATF)
• NC Department of Justice
11. Other information
• Impulse buying – buying things based on
emotion instead of thought
• Comparison shopping – looking at multiple
brands/stores to find the best or cheapest
product
• Disposable vs. discretionary income: disposable
money (aka net pay) is what’s left after taxes and
discretionary income is the money left after
paying for necessities
• Collateral- if borrower fails to repay a loan, the
lender shall seize the collateral (property with
value, ex: car, jewelry, house, etc.)
12. Don’t forget… stocks, bonds, and
mutual funds
Stock- buying partial ownership in a
company
Bond- lending money to the government
but there is a guaranteed return of full
amount plus interest
Mutual Fund- pools of money from
multiple people who are invested in
many different stocks and bonds
