Financial Literacy Basics

Name:

Date:

Financial literacy illustration with dollar signs and calculator

💰 Part 1: Financial Terms & Concepts

1. Which of the following best defines "budgeting"?

Spending money on whatever you want

Planning how to allocate your income for expenses and savings

Only paying for necessary items

Borrowing money from friends

2. What is compound interest?

Interest calculated only on the principal amount

Interest calculated on both principal and previously earned interest

A type of bank fee

Money you owe on a credit card

3. Which factors can negatively impact your credit score? (Check all that apply)

Making late payments

Paying off your credit card balance in full

Using too much of your available credit

Having a savings account

4. Fill in the blank: A good rule of thumb is to save ______% of your income each month.

Answer: ___________

📊 Part 2: Budget Analysis

Scenario: Sarah earns $2,500 per month. Her budget breakdown is:

• Rent: $800 • Food: $400 • Transportation: $300 • Utilities: $150 • Entertainment: $200 • Savings: $350 • Other: $300

5. Calculate Sarah's total monthly expenses (excluding savings):

6. What percentage of Sarah's income does she save each month? Show your work:

7. Identify two expenses that are "discretionary" (not essential) and explain how reducing them could help Sarah:

💳 Part 3: Credit Card Scenario

Credit Card Statement Summary:

• Balance: $1,200 • Minimum Payment: $25 • APR: 18% • Late Fee: $35

8. If you only make the minimum payment of $25 each month, approximately how much interest will you pay in one year? (Use the formula: Balance × APR)

9. Explain in 2-3 sentences why making only minimum payments on credit cards can be financially harmful:

10. Write one specific financial goal you have for the next year and describe one strategy from today's lesson that could help you achieve it:

Financial Literacy Basics

Financial Literacy Basics

💰 Part 1: Financial Terms & Concepts

📊 Part 2: Budget Analysis

💳 Part 3: Credit Card Scenario

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