Financial Literacy Reflection

1. What are the costs and benefits of credit, such as loans and credit cards?

The potential costs of loans and credit cards can be consequences such as overspending,
which can lead to extreme debt and a low credit score. A few benefits can include buying on
credit and earning rewards on purchases. Using a credit card creates a credit history which
can be used to open more credit or to buy a house.

2. How can you use credit responsibly to achieve your financial goals?

One can use credit responsibly by paying back what is owed and not overspending. Someone
once told me that they only use a credit card for emergencies or for bills in which they pay
back right away.

3. What taxes do citizens pay and how are they calculated?

Income taxes are based on one's income and a percentage is taken to fund federal, state and
sometimes local expenditures such as medicare and infrastructure.

Sales tax is a set calculated percentage taken when purchasing goods and sometimes
services. There are some states such as Oregon in which sales tax is not collected.

4. How can insurance help protect your financial future?

Insurance such as health insurance can protect you from debt in cases of emergencies. Health
services are very expensive and insurance can help lower that amount. It is the same thing for
car insurance; it can help pay for damages in case of an accident.

5. How does setting goals and budgeting help you achieve financial success?

Setting financial goals and budgeting can set you up for financial success in the future. Many
people have a savings account to use in case of emergencies or save for retirement. If one
does not overspend and budgets wisely, they will be able to save more money and can relax
and not stress about the future financially.

6. How do maintaining healthy finances affect your overall physical and emotional health?

Being in a healthy financial state can help you in situations such as being able to pay for
health insurance, which may keep you healthy in the long run. It may also help with
emotional health because one is more likely to become depressed or stressed when dealing
with financial problems.

7. What is your plan to develop healthy financial practices? Discuss three ways that you plan to
make healthy financial decisions to protect your future.

I plan to rarely use my credit card except for the required transactions to avoid an inactivity
fee or card cancelation.

I also plan to start a savings account to use in case of only emergencies and to save up for
future expenses such as books in college.

I plan to create a budget to stay away from any unnecessary spending.