FINANCIAL LITERACY TEST REVIEW-KEY TERMS
60, 20, 10, 10 Rule - CORRECT ANSWER-60% for Spending, 20% for Savings,
10% for Investing, 10% Charitable Contributions
$1,000 - CORRECT ANSWER-Minimum amount for an emergency/opportunity
fund. First Priority of a Budget.
401K - CORRECT ANSWER-A qualified plan established by employers to which
eligible employees may make salary deferral (salary reduction) contributions on
a post-tax and/or pretax basis. Employers offering this plan may make matching
or non-elective contributions to the plan on behalf of eligible employees and
may also add a profit-sharing feature to the plan. Earnings accrue on a tax-
deferred basis.
403 (b) - CORRECT ANSWER-A U.S. tax-advantaged retirement savings plan
available for public education organizations, some non-profit employers (only
Internal Revenue Code 501(c)(3) organizations), cooperative hospital service
organizations, and self-employed ministers in the United States.
529 Plans - CORRECT ANSWER-Tax-advantaged savings plan designed to
encourage saving for future education costs that are sponsored by states, state
agencies, or educational institutions.
Advertising - CORRECT ANSWER-To call public attention to, especially by
pointing out desirable qualities so as to create a desire to buy or do business
with.
, Amortization Table/Schedule - CORRECT ANSWER-A schedule of payments
showing the amounts of principal and interest that make up each payment.
Annual Percentage Rate (APR) - CORRECT ANSWER-The annual rate that is
charged for borrowing (or made by investing), expressed as a single percentage
number that represents the actual yearly cost of funds over the term of a loan.
This includes any fees or additional costs associated with the transaction.
Bankruptcy - CORRECT ANSWER-A legal proceeding involving a person or
business that is unable to repay outstanding debts. It begins with a petition
filed by the debtor (most common) or on behalf of creditors (less common).
Beneficiary - CORRECT ANSWER-A person who benefits or is expected to
benefit from something; the person who receives the insurance money when
policy funds are dispersed.
Budget - CORRECT ANSWER-A financial plan used to forecast and track income
and expenses.
Career - CORRECT ANSWER-Profession or field of employment for which one
trains, such as financial services or medicine.
Charitable Contributions - CORRECT ANSWER-In general, money is given to a
charitable organization that exists to benefit society as a whole rather than to
enrich individual owners or shareholders.
Closing Costs - CORRECT ANSWER-Closing costs are fees paid at the closing of a
real estate transaction. This point in time called the closing is when the title to
the property is conveyed to the buyer. Closing costs are incurred by either the
buyer or the seller.
60, 20, 10, 10 Rule - CORRECT ANSWER-60% for Spending, 20% for Savings,
10% for Investing, 10% Charitable Contributions
$1,000 - CORRECT ANSWER-Minimum amount for an emergency/opportunity
fund. First Priority of a Budget.
401K - CORRECT ANSWER-A qualified plan established by employers to which
eligible employees may make salary deferral (salary reduction) contributions on
a post-tax and/or pretax basis. Employers offering this plan may make matching
or non-elective contributions to the plan on behalf of eligible employees and
may also add a profit-sharing feature to the plan. Earnings accrue on a tax-
deferred basis.
403 (b) - CORRECT ANSWER-A U.S. tax-advantaged retirement savings plan
available for public education organizations, some non-profit employers (only
Internal Revenue Code 501(c)(3) organizations), cooperative hospital service
organizations, and self-employed ministers in the United States.
529 Plans - CORRECT ANSWER-Tax-advantaged savings plan designed to
encourage saving for future education costs that are sponsored by states, state
agencies, or educational institutions.
Advertising - CORRECT ANSWER-To call public attention to, especially by
pointing out desirable qualities so as to create a desire to buy or do business
with.
, Amortization Table/Schedule - CORRECT ANSWER-A schedule of payments
showing the amounts of principal and interest that make up each payment.
Annual Percentage Rate (APR) - CORRECT ANSWER-The annual rate that is
charged for borrowing (or made by investing), expressed as a single percentage
number that represents the actual yearly cost of funds over the term of a loan.
This includes any fees or additional costs associated with the transaction.
Bankruptcy - CORRECT ANSWER-A legal proceeding involving a person or
business that is unable to repay outstanding debts. It begins with a petition
filed by the debtor (most common) or on behalf of creditors (less common).
Beneficiary - CORRECT ANSWER-A person who benefits or is expected to
benefit from something; the person who receives the insurance money when
policy funds are dispersed.
Budget - CORRECT ANSWER-A financial plan used to forecast and track income
and expenses.
Career - CORRECT ANSWER-Profession or field of employment for which one
trains, such as financial services or medicine.
Charitable Contributions - CORRECT ANSWER-In general, money is given to a
charitable organization that exists to benefit society as a whole rather than to
enrich individual owners or shareholders.
Closing Costs - CORRECT ANSWER-Closing costs are fees paid at the closing of a
real estate transaction. This point in time called the closing is when the title to
the property is conveyed to the buyer. Closing costs are incurred by either the
buyer or the seller.
