Personal Finance Study Guide
This study guide contains open questions to help you review the key concepts covered in the course. Thinking through these questions will prepare you for the exam.
Section 1: Investments
- What are some examples of internal factors that can affect a company's stock price?
- What are some examples of external factors that can affect a company's stock price?
- Define what an Exchange Traded Fund (ETF) is.
- What are the main advantages of investing in ETFs compared to buying individual stocks?
- Reflecting on the Investopedia simulation, what were the most significant lessons you learned about investing in the stock market?
Section 2: Mortgage Amortization
- When comparing different mortgage options, what key factors should you analyze using an amortization table?
- How does the loan term (e.g., 15 years vs. 30 years) impact your monthly payment, the total interest paid, and how quickly you build equity?
- Explain how an origination fee added to the loan amount affects the total cost of a mortgage.
- Describe the components of a monthly mortgage payment and how the proportion of principal and interest changes over the life of the loan.
Section 3: Income Calculation
- How do you calculate your regular hourly pay for a given period (e.g., weekly, annually)?
- Explain how overtime pay is typically calculated and how it affects your gross income.
- What is the difference between gross income and net income?
Section 4: Taxes and Tax Forms (Including W-4)
- What is the primary purpose of the W-4 form, and why is it important to fill it out accurately?
- How does the information you provide on your W-4 form influence the amount of federal income tax withheld from your paycheck?
- What are the potential consequences of having too much or too little federal income tax withheld throughout the year?
- When should you consider updating your W-4 form?
- Describe the purpose of the W-2 form and when you should expect to receive it.
- What is a 1099 form, and how does it differ from a W-2 form?
- What is the purpose of the 1040 form?
- What are some important practices to follow to avoid tax fraud?
- In what situations might it be beneficial to seek professional assistance with your taxes?
Section 5: The Savings Equation and Mindset
- Explain the savings equation: Income - Expenses = Savings.
- Which component of the savings equation do individuals generally have the most immediate control over, and why?
- How does reducing expenses impact your ability to save?
- Why are investment returns generally considered less controllable than income or expenses?
- Describe what a disciplined savings mindset means to you.
- How can a disciplined savings mindset influence your spending decisions?
Section 6: Time Management (The 168 Hours)
- Explain the concept of the "168 hours" and how tracking your time can be a valuable personal finance tool.
- How can analyzing how you spend your time help you identify opportunities to increase your income or reduce expenses? Provide specific examples.
- Think about how you currently spend your time. Are there any activities you could adjust to free up time for financial planning, earning more, or learning new financial skills? Explain your thinking.
--- End of Study Guide ---