ugba 135 mt1 UPDATED ACTUAL Questions And Correct Answers
Time value of money - a dollar today is worth more than a dollar in the future
- More certain, Unforeseen circumstances , You can invest it , Inflation decreases
worth
Present value (PV) - value of money offered today
PV = FV / (1 + r)^T
PV of annuity C = periodic cash flow
N = number of periods
r = interest rate used to value annuity
Future value FV - future value of money after investing
FV = PV (1 + r) ^T
Rule of 72 - calculateS time needed to double your money, or interest rate needed to
double your money
t = 72 / r (%)
Simple interest - Interest calculated using only the original amount of money (the principal),
interest amount stays the same every period
Compound interest - interest on top of your interest, calculated using original money plus any interest
already earned
SMART goals Specific
Measurable
Achievable
Relevant
Time bound
Budgeting tips - Know where your money is going
- Pay yourself first (put into retirement accounts and remaning to checking
- Make saving automatic
-Increase savings rate
- Save half spend half approach
How to save 3 categories
1. Must haves - at or below 50% of after tax income
2. Savings - 20% goal of after tax income
3. Wants - 30% of after tax income on wants
Account - agreement between you and a business (bank, brokerage, credit union), A
record of transactions
, Checking account - bank account used for everyday spending, workhorse account
- Only enough to pay bills and provide a buffer
- Used to deposit and withdraw money and pay for things using a debit card
Monthly fee or keep a minimum amount or be a student
- Link to your high yield savings account and brokerage accounts
- Balance is how much money you have
Debit card - similar to cash, instantly deducts from your account and usually an ATM card
- No annual fees, no impact to credit score, no rewards
High yield savings account / emergency fund - savings account that pays a higher interest rate than a regular savings account
- Balance is how much money you have
- Liquid savings, tapped quickly
- 3-6 months of fixed expenses (6 for single income, 3 for double income house)
- Cannot suffer a loss of principal but rates will fluctuate with current events
- Link to your checking account and can transfer money between accounts
- Have multiple accounts at one company and nickname them for their purpose
Loan account - bank or institution loans you money and you make payments back but are
charged interest
- Balance is how much money you OWE
Credit card account - borrow money from a lender to make purchases and repay it later, with interest
if the balance isn't paid in full
- Balance is how much money you OWE
- High interest rate charged on unpaid balences
- Guranteed to spend more money with a credit card
-benefit the wealthy at the expense of the poor, credit card users reimbursed with
flying miles or cash back
credit card usage tips - ALWAYS PAY ENTIRE BALANCE AT THE END OF EACH MONTH and turn on
autopay and paper statements
- Do NOT USE A CREDIT CARD IF YOU CANNOT PAY OFF IN FULL EACH
MONTH
- need to pay statement balance each month
Credit score - number that assess your likeness and ability to repay borrowed money on time,
based on your credit history.
- Used for mortgage, loans, employment, housing, Student loan refinancing rates,
Auto insurance, Unlocks top tier credit cards (AMEX platnium, citi strata)
Components of credit score 1. Payment history 35% of score
- Missed payments stay for 7 years
- Bankruptcies stay for 10 years
2. Utilization 30% of score
3. Average age of accounts 15% of score
4. Mix of credit 10% of score
Get a no annual fee card and keep it open, making at least 1 transaction a year to
avoid closure
Leave oldest lines open
5. Recent inquiries 10% of score , hard pulls
Time value of money - a dollar today is worth more than a dollar in the future
- More certain, Unforeseen circumstances , You can invest it , Inflation decreases
worth
Present value (PV) - value of money offered today
PV = FV / (1 + r)^T
PV of annuity C = periodic cash flow
N = number of periods
r = interest rate used to value annuity
Future value FV - future value of money after investing
FV = PV (1 + r) ^T
Rule of 72 - calculateS time needed to double your money, or interest rate needed to
double your money
t = 72 / r (%)
Simple interest - Interest calculated using only the original amount of money (the principal),
interest amount stays the same every period
Compound interest - interest on top of your interest, calculated using original money plus any interest
already earned
SMART goals Specific
Measurable
Achievable
Relevant
Time bound
Budgeting tips - Know where your money is going
- Pay yourself first (put into retirement accounts and remaning to checking
- Make saving automatic
-Increase savings rate
- Save half spend half approach
How to save 3 categories
1. Must haves - at or below 50% of after tax income
2. Savings - 20% goal of after tax income
3. Wants - 30% of after tax income on wants
Account - agreement between you and a business (bank, brokerage, credit union), A
record of transactions
, Checking account - bank account used for everyday spending, workhorse account
- Only enough to pay bills and provide a buffer
- Used to deposit and withdraw money and pay for things using a debit card
Monthly fee or keep a minimum amount or be a student
- Link to your high yield savings account and brokerage accounts
- Balance is how much money you have
Debit card - similar to cash, instantly deducts from your account and usually an ATM card
- No annual fees, no impact to credit score, no rewards
High yield savings account / emergency fund - savings account that pays a higher interest rate than a regular savings account
- Balance is how much money you have
- Liquid savings, tapped quickly
- 3-6 months of fixed expenses (6 for single income, 3 for double income house)
- Cannot suffer a loss of principal but rates will fluctuate with current events
- Link to your checking account and can transfer money between accounts
- Have multiple accounts at one company and nickname them for their purpose
Loan account - bank or institution loans you money and you make payments back but are
charged interest
- Balance is how much money you OWE
Credit card account - borrow money from a lender to make purchases and repay it later, with interest
if the balance isn't paid in full
- Balance is how much money you OWE
- High interest rate charged on unpaid balences
- Guranteed to spend more money with a credit card
-benefit the wealthy at the expense of the poor, credit card users reimbursed with
flying miles or cash back
credit card usage tips - ALWAYS PAY ENTIRE BALANCE AT THE END OF EACH MONTH and turn on
autopay and paper statements
- Do NOT USE A CREDIT CARD IF YOU CANNOT PAY OFF IN FULL EACH
MONTH
- need to pay statement balance each month
Credit score - number that assess your likeness and ability to repay borrowed money on time,
based on your credit history.
- Used for mortgage, loans, employment, housing, Student loan refinancing rates,
Auto insurance, Unlocks top tier credit cards (AMEX platnium, citi strata)
Components of credit score 1. Payment history 35% of score
- Missed payments stay for 7 years
- Bankruptcies stay for 10 years
2. Utilization 30% of score
3. Average age of accounts 15% of score
4. Mix of credit 10% of score
Get a no annual fee card and keep it open, making at least 1 transaction a year to
avoid closure
Leave oldest lines open
5. Recent inquiries 10% of score , hard pulls
