Adann’ya Carriel

Career Ex 2

Lesson 13

Financial Literacy Re ection

1. What are the costs and bene ts of credit, such as loans and credit cards?
Bene ts

• It is convenient and easy to access.

• You are able to use and pay over time.

• You are able to establish credit history.

Costs

• There is interest associated with it that will cost more over time.

• Over use of credit will and can lead to poor credit history.

• It becomes more expansive and di cult for future credit access.

• It can reduce future buying power, everything bought in the past is being paid with current
funds.

• The added fees alone will keep you in debt longer.

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

Using credit responsibly while achieving my nancial goals, is to set spending limits based on
current income and adjust accordingly. Make more than the minimum payment monthly. Think
twice before using credit. Look at the cost e ectiveness and only use credit for necessities.

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

Taxes citizens pay are : income tax (what you earn), payroll tax (social security, medical, etc.),
capital gain tax (stocks, home, car, etc.), sales tax ( retail goods), excise tax (gas). They are
calculated by several means.

Income tax is calculated by tax rates of speci c percentages on income thresholds- tax
brackets. Payroll taxes are calculated by taxing the wages of employees. There may be other
withholdings such as medical, social security, life insurance, and retirements. Capital gain taxes
include personal property like homes, cars, jewelry, and estate assets.

Other capital gain taxes would include investments ( stocks and bonds.) These assets increase
in value over time. They are taxed once sold. Citizens pay sales tax for consumption of retail
goods and services. These taxes are based on city ordinances that contribute to state and
local revenue. Excise tax is a special tax for the government to promote reduce of usage.

4. How can insurance help protect your nancial future?

Insurance can help protect your nancial future by preparing for the unexpected. It also assists
you in reaching your goals after facing nancial crisis that are unforeseen. Insurance can also
protect you from emptying emergency funds, such as your savings, stocks and bonds or
certi cate deposits you have invested in. The goal of insurance is to protect you from major
nancial loss during times of distress. Some insurances may promise reimbursement for a loss
on paid premiums depending on the types of accounts you hold. Having a solid credit history
and being of true credit worthiness will assist in securing the best insurance policies.

5. How does setting goals and budgeting help you achieve nancial success?
Setting nancial goals will assist you in achieving nancial success by giving you the larger
vision for your nances and your life. Setting up nancial goals also allows you to plan on your
needs and wants and make them digestible and achievable. If you go set it allows you to
create roadmaps to getting where you need to be for your important goals, such as covering
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 education also purchasing a home in the future and securing the best loan options for credit
worthiness. Setting nancial goals will allow you to track measurable progress by achieving
small goals with results, such as saving $100 a month. This is an example of a small nancial
goal that you can track and that is achievable because it is within your means.

Budgeting helps in achieving nancial success by allowing you to set goals based on your
current means to provide for yourself. Having a sound nancial budget allows for you to
achieve nancial success with small digestible savings goals. Budgeting may look di erent
month to month depending on nancial constraints or changes in the economy. Budgeting
allows room to make changes ahead of time for unforeseeable nancial woes. Keeping a
consistent budget also allows for you to track spending habits.

6. How do maintaining healthy nances a ect your overall physical and emotional
health?
Maintaining healthy nances a ects your overall physical and emotional health by ensuring that
you are able to provide your basic necessities of food, shelter and clothing. You are emotionally
secure when your nances are correct and you are able to provide for yourself and your family.
Your physical health is maintain with healthy nances because you are able to provide food
and shelter.

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

My plan to develop healthy nancial practices are to maintain my savings account. I also plan
to maintain my certi cate deposits by the monthly direct withdrawals from my checking
account. I will also develop healthy nancial practices by saving 50 to 75% of earned income
from working and miscellaneous jobs. I currently have a spending budget that has a limit of
$100 a month. My mom has a credit card for me to use and it also allows me to build my
credit. The credit card is set up to only use up to 30% of the current credit limit. The added
feature to the credit card is to put a spending of $100 per billing cycle.

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