Title: Personal Finance Mastery — LearnCoachAssist

Q: What is personal finance?
A: The management of an individual's money — earning, saving, spending, investing, protecting.

Q: What is a budget?
A: A plan for how income will be spent and saved.

Q: What is the 50/30/20 rule?
A: 50% needs, 30% wants, 20% savings and debt repayment.

Q: What is the difference between needs and wants?
A: Needs are essential for life; wants are preferred but not required.

Q: What is net worth?
A: Total assets minus total liabilities.

Q: What is an asset?
A: Something you own with monetary value.

Q: What is a liability?
A: A debt or financial obligation.

Q: What is cash flow?
A: Money coming in vs going out.

Q: What is the difference between gross and net income?
A: Gross is before taxes; net is after.

Q: What is take-home pay?
A: Net income after taxes and deductions.

Q: What is an emergency fund?
A: Cash reserves for unexpected expenses or income loss.

Q: What size emergency fund is recommended?
A: 3-6 months of essential expenses; 6-12 for variable income.

Q: Where should emergency funds be kept?
A: High-yield savings account, money market, or short-term treasuries.

Q: What is liquidity?
A: How easily an asset can be converted to cash.

Q: What is compound interest?
A: Earning interest on previously earned interest.

Q: What is the rule of 72?
A: Divide 72 by interest rate for approximate doubling time.

Q: What is the time value of money?
A: A dollar today is worth more than a dollar in the future.

Q: What is inflation?
A: A general rise in prices reducing purchasing power.

Q: What is real return?
A: Return after adjusting for inflation.

Q: What is nominal return?
A: Return before adjusting for inflation.

Q: What is the average historical inflation in the US?
A: ~3% per year long-term.

Q: What is purchasing power?
A: What money can actually buy at a point in time.

Q: What is income?
A: Money received from work, investments, gifts, etc.

Q: What are sources of income?
A: Earned (work), passive (investments), portfolio (capital gains/dividends).

Q: What is FICA?
A: US payroll tax for Social Security and Medicare.

Q: What is W-2?
A: US tax form summarizing employee wages.

Q: What is 1099?
A: US tax form for independent contractors and various income.

Q: What is tax bracket?
A: A range of income taxed at a specific rate.

Q: What is marginal tax rate?
A: The tax rate on your next dollar of income.

Q: What is effective tax rate?
A: Total tax divided by total income.

Q: What is the difference between progressive and regressive tax?
A: Progressive taxes higher incomes more; regressive taxes lower incomes more.

Q: What is a tax deduction?
A: An amount reducing taxable income.

Q: What is a tax credit?
A: A direct reduction of tax owed.

Q: What is the standard deduction?
A: A flat deduction available to all taxpayers in some systems.

Q: What is itemized deduction?
A: Listing specific deductible expenses.

Q: What is tax-deferred?
A: Taxed later, allowing growth before taxation.

Q: What is tax-free?
A: Never taxed, like Roth account earnings if rules met.

Q: What is a 401(k)?
A: US employer-sponsored retirement plan with pretax contributions.

Q: What is a Roth 401(k)?
A: After-tax contributions with tax-free growth.

Q: What is an IRA?
A: Individual Retirement Account — tax-advantaged personal retirement account.

Q: What is a traditional IRA?
A: Pretax contributions; taxed on withdrawal.

Q: What is a Roth IRA?
A: After-tax contributions; tax-free growth and withdrawal.

Q: What is the 2024 401(k) contribution limit?
A: $23,000 (plus $7,500 catch-up for 50+).

Q: What is the 2024 IRA contribution limit?
A: $7,000 (plus $1,000 catch-up).

Q: What is employer match?
A: Employer contribution matching employee 401(k) deposits.

Q: What is vesting?
A: The process of earning rights to employer contributions.

Q: What is RMD?
A: Required Minimum Distribution from retirement accounts after a certain age.

Q: What is HSA?
A: Health Savings Account — tax-advantaged for medical expenses (requires HDHP).

Q: What is FSA?
A: Flexible Spending Account — pretax for medical expenses; usually use-it-or-lose-it.

Q: What is a 529 plan?
A: Tax-advantaged account for education expenses.

Q: What is the difference between saving and investing?
A: Saving preserves capital; investing seeks growth at higher risk.

Q: What is risk tolerance?
A: How much volatility one can emotionally and financially handle.

Q: What is risk capacity?
A: Financial ability to absorb losses (different from tolerance).

Q: What is asset allocation?
A: Distribution of investments across asset classes.

Q: What is diversification?
A: Spreading risk across many investments.

Q: What is correlation (investing)?
A: How investments move relative to each other.

Q: What is a stock?
A: A share of ownership in a company.

Q: What is a bond?
A: A loan to an entity that pays interest.

Q: What is a mutual fund?
A: A pooled investment managed by professionals.

Q: What is an ETF?
A: Exchange-Traded Fund — trades like a stock, often passively managed.

Q: What is an index fund?
A: A fund tracking a market index passively.

Q: What is the S&P 500?
A: An index of 500 large US companies.

Q: What is the difference between active and passive investing?
A: Active aims to beat the market; passive matches it.

Q: What is the long-term return of the S&P 500?
A: Historically ~10% nominal, ~7% real.

Q: What is dollar-cost averaging?
A: Investing fixed amounts on a schedule regardless of price.

Q: What is lump-sum investing?
A: Investing a large amount at once; historically beats DCA on average.

Q: What is market timing?
A: Trying to buy low and sell high; generally fails over time.

Q: What is "time in market beats timing the market"?
A: A common investing maxim.

Q: What is rebalancing?
A: Restoring target asset allocation after market moves.

Q: What is a dividend?
A: A cash payment from a company to shareholders.

Q: What is dividend yield?
A: Annual dividend divided by stock price.

Q: What is total return?
A: Price appreciation + dividends + interest reinvested.

Q: What is capital gain?
A: Profit from selling an asset for more than its cost.

Q: What is short-term vs long-term capital gain?
A: Held less/more than one year; long-term taxed at lower rates in US.

Q: What is tax-loss harvesting?
A: Selling investments at a loss to offset gains.

Q: What is wash sale rule?
A: Loss is disallowed if you repurchase the same security within 30 days.

Q: What is a brokerage account?
A: A taxable investment account.

Q: What is a robo-advisor?
A: An automated investment service.

Q: What are expense ratios?
A: Annual fees for funds, expressed as percentages.

Q: What is a high expense ratio?
A: Over ~0.5% for index funds is high; active funds often charge more.

Q: What is the impact of fees over time?
A: Even 1% annually can reduce 30-year wealth by 25%+.

Q: What is the difference between front-end and back-end load?
A: Front-end charged on purchase; back-end on sale.

Q: What is no-load fund?
A: A fund without sales charges.

Q: What is the expense ratio for typical index funds?
A: 0.03%-0.20% for major broad-market index funds.

Q: What is a target-date fund?
A: A fund automatically rebalancing as you approach a target year.

Q: What are bonds rated by?
A: Moody's, S&P, Fitch — credit rating agencies.

Q: What is investment grade bond?
A: BBB-/Baa3 or higher.

Q: What is a junk bond?
A: Below investment grade; higher yield, higher risk.

Q: What is duration (bonds)?
A: Sensitivity of bond price to interest rate changes.

Q: What is yield curve?
A: Relationship between bond yields and maturities.

Q: What is an inverted yield curve?
A: Short-term yields exceed long-term; often signals recession.

Q: What is the role of bonds in a portfolio?
A: Reduce volatility and provide income.

Q: What is the 4% rule?
A: Withdrawing 4% of retirement savings annually has historically lasted 30 years.

Q: What is FIRE?
A: Financial Independence, Retire Early — a movement.

Q: What is the savings rate?
A: Percentage of income saved.

Q: What is the relationship between savings rate and time to FI?
A: Higher savings rate dramatically shortens time to financial independence.

Q: What is Coast FIRE?
A: Saving enough so growth alone will fund retirement.

Q: What is Lean FIRE?
A: Retiring early with a frugal lifestyle.

Q: What is Fat FIRE?
A: Retiring early with a higher spending budget.

Q: What is debt?
A: Money owed to another party.

Q: What is good debt vs bad debt?
A: Good debt finances appreciating/income-producing assets; bad debt finances consumption.

Q: What is interest rate?
A: The cost of borrowing money as a percentage.

Q: What is APR?
A: Annual Percentage Rate — annualized cost of borrowing.

Q: What is APY?
A: Annual Percentage Yield — return including compounding.

Q: What is the snowball method?
A: Paying off smallest debts first for motivation.

Q: What is the avalanche method?
A: Paying off highest-interest debts first to minimize cost.

Q: What is debt consolidation?
A: Combining multiple debts into one, often at lower rate.

Q: What is a credit score?
A: A numerical rating of creditworthiness (e.g., FICO 300-850).

Q: What factors affect credit scores?
A: Payment history, amounts owed, credit history length, new credit, credit mix.

Q: What is the most important factor in credit score?
A: Payment history (~35%).

Q: What is credit utilization?
A: % of available credit being used; lower is better (under 30%, ideally under 10%).

Q: What is a credit report?
A: A detailed record of credit history from credit bureaus.

Q: What are the three major US credit bureaus?
A: Equifax, Experian, TransUnion.

Q: What is a credit freeze?
A: Restricting access to your credit report to prevent fraud.

Q: What is identity theft?
A: Someone using your personal info for fraud.

Q: What is a credit card?
A: A revolving line of credit used for purchases.

Q: What is a charge card?
A: A card that must be paid in full each month.

Q: What is a debit card?
A: A card linked to a bank account, drawing from balance.

Q: What is the difference between credit and debit?
A: Credit borrows; debit uses your own money.

Q: What is credit card grace period?
A: The time between purchase and when interest is charged on the balance.

Q: What is the danger of minimum payments?
A: Most of the payment is interest; balance grows slowly or not at all.

Q: What is a balance transfer?
A: Moving credit card debt to another card, often with promotional rate.

Q: What is a mortgage?
A: A loan to purchase real estate.

Q: What is a fixed-rate vs adjustable-rate mortgage?
A: Fixed stays the same; adjustable changes.

Q: What is the typical mortgage term?
A: 15 or 30 years in the US.

Q: What is PMI?
A: Private Mortgage Insurance, required with less than 20% down.

Q: What is escrow?
A: An account held by lender for property taxes and insurance.

Q: What is the difference between renting and buying?
A: Renting is flexible; buying builds equity.

Q: What is the rent-vs-buy calculation?
A: Compare total costs including opportunity cost of down payment.

Q: What is the 28/36 rule?
A: Housing cost ≤ 28% of gross income; total debt ≤ 36%.

Q: What is house poor?
A: Spending so much on housing little remains for other goals.

Q: What is the role of insurance?
A: Transferring catastrophic risk to an insurer for a premium.

Q: What is a premium?
A: The amount paid for insurance coverage.

Q: What is a deductible?
A: Amount paid out of pocket before insurance pays.

Q: What is a co-pay?
A: A fixed fee for a covered service.

Q: What is co-insurance?
A: Percentage of cost shared with insurer after deductible.

Q: What is an out-of-pocket maximum?
A: Annual cap on what you pay before insurance covers 100%.

Q: What types of insurance are essential?
A: Health, auto, home/renters, disability, term life.

Q: What is term life insurance?
A: Coverage for a fixed period; cheap and simple.

Q: What is whole life insurance?
A: Permanent coverage with cash value; expensive and complex.

Q: What is disability insurance?
A: Replaces income if you can't work.

Q: What is umbrella insurance?
A: Liability coverage above auto/home limits.

Q: What is the role of an estate plan?
A: Directs asset distribution and minimizes probate.

Q: What is a will?
A: A legal document specifying asset distribution.

Q: What is a trust?
A: A legal entity holding assets per its terms.

Q: What is power of attorney?
A: Authority for someone to act on your behalf.

Q: What is a healthcare proxy?
A: Designation of someone to make medical decisions for you.

Q: What is beneficiary designation?
A: Who receives an asset on death (overrides will).

Q: What is the role of an estate planner?
A: Designs and updates plans according to laws.

Q: What is probate?
A: Legal process for settling an estate.

Q: What is intestate?
A: Dying without a will.

Q: What is the gift tax?
A: Tax on transfers above annual exclusion (US: $18K per recipient in 2024).

Q: What is the estate tax?
A: Tax on assets transferred at death above exemption.

Q: What is the step-up in basis?
A: Heir's cost basis becomes fair market value at death.

Q: What is a financial plan?
A: A comprehensive strategy across income, savings, investing, taxes, insurance, estate.

Q: What is a financial advisor?
A: A professional who helps with money decisions.

Q: What is a fiduciary?
A: Someone legally required to act in your best interest.

Q: What is a CFP?
A: Certified Financial Planner — well-respected advisor credential.

Q: What is the difference between fee-only and commission-based advisors?
A: Fee-only is paid by clients; commission-based earns from product sales.

Q: What is a fee-only advisor's typical structure?
A: Hourly, flat fee, or AUM-based (often 1%).

Q: What is the difference between robo-advisor and human?
A: Robo is automated and cheap; human can provide judgment and emotional support.

Q: What is the most important financial habit?
A: Spending less than you earn consistently.

Q: What is paying yourself first?
A: Saving/investing automatically before spending.

Q: What is automation in personal finance?
A: Setting up automatic transfers and bill payments.

Q: What is "set and forget" investing?
A: Automatic recurring investments in diversified funds.

Q: What is lifestyle inflation?
A: Spending rising with income, undermining savings.

Q: What is the latte factor?
A: Idea that small daily expenses compound; often oversimplified.

Q: What is the bigger lever for wealth?
A: Earnings growth and savings rate, often more than expense reduction.

Q: What is FU money?
A: Enough savings to walk away from a bad situation.

Q: What is financial independence?
A: Investment income covers essential expenses.

Q: What is the role of side income?
A: Diversifies earnings and accelerates goals.

Q: What is gig work?
A: Short-term, flexible jobs often via platforms.

Q: What is freelancing?
A: Selling services as an independent.

Q: What is the importance of multiple income streams?
A: Resilience and accelerated wealth-building.

Q: What is geographic arbitrage?
A: Earning in high-cost area while living in lower-cost area.

Q: What is the safe withdrawal rate?
A: Sustainable withdrawal rate in retirement (often 3-4%).

Q: What is sequence-of-returns risk?
A: Poor early-retirement returns can devastate portfolios.

Q: What is the bucket strategy?
A: Holding short-, medium-, long-term assets for different needs.

Q: What is Social Security?
A: US government retirement and disability benefits.

Q: What is full retirement age?
A: Age for unreduced Social Security benefits (66-67).

Q: What is delayed retirement credits?
A: Higher Social Security from delaying past full retirement.

Q: What is the Social Security tax cap?
A: The wage base subject to FICA (changes annually).

Q: What is Medicare?
A: US health insurance for 65+ or with certain conditions.

Q: What is Medicaid?
A: US state-administered health insurance for low-income.

Q: What is the importance of healthcare planning?
A: Healthcare is a top retirement expense.

Q: What is long-term care?
A: Services for those unable to perform daily activities; expensive.

Q: What is long-term care insurance?
A: Coverage for nursing home, assisted living, in-home care.

Q: What is the gender wealth gap?
A: Women on average have less wealth, partly due to wage gap and caregiving.

Q: What is the racial wealth gap?
A: Disparities in wealth by race, with deep historical roots.

Q: What is financial literacy?
A: Knowledge and skills to make sound financial decisions.

Q: What is the role of financial education?
A: Improves decision quality and outcomes.

Q: What is mental accounting?
A: Treating money differently based on source or purpose; often suboptimal.

Q: What is loss aversion?
A: Feeling losses more strongly than equivalent gains.

Q: What is the endowment effect?
A: Valuing things you own more highly.

Q: What is anchoring?
A: Over-relying on first information received.

Q: What is the planning fallacy?
A: Underestimating time and resources needed.

Q: What is recency bias (investing)?
A: Overweighting recent performance.

Q: What is the importance of investor behavior?
A: Behavior often matters more than investment selection.

Q: What is the cost of panic selling?
A: Locking in losses; missing recovery.

Q: What is the cost of FOMO buying?
A: Buying high based on excitement.

Q: What is investor return vs investment return?
A: Investor return is lower due to behavior gaps (Dalbar studies).

Q: What is "the best investment is the one you can stick with"?
A: Behavioral wisdom: consistency beats optimization.

Q: What is the difference between rich and wealthy?
A: Rich is high income; wealthy is having assets that sustain freedom.

Q: What is "stealth wealth"?
A: Living modestly despite financial success.

Q: What is the millionaire next door?
A: Most US millionaires live frugally and accumulate over time.

Q: What is the role of "enough"?
A: Defining your number reduces lifestyle creep and anxiety.

Q: What is the hedonic treadmill?
A: Continuously chasing happiness through more.

Q: What is financial therapy?
A: Combining psychology with financial counseling.

Q: What is the role of generosity?
A: Giving connects to meaning and increases life satisfaction.

Q: What is the donor-advised fund?
A: A vehicle for charitable giving with tax benefits.

Q: What is the most important first financial step?
A: Building an emergency fund and contributing to a retirement account.

Q: What is the importance of starting early?
A: Compound interest dramatically rewards early starters.

Q: What does $1,000 invested at 7% become in 40 years?
A: ~$14,974.

Q: What is the difference between net pay and disposable income?
A: Net pay is after taxes; disposable income is after non-discretionary expenses.

Q: What is the difference between fixed and variable expenses?
A: Fixed don't change (rent); variable do (groceries).

Q: What is a "no-spend month"?
A: A month avoiding non-essential spending; reset tool.

Q: What is conscious spending?
A: Spending in line with values and joy, cutting elsewhere ruthlessly.

Q: What is the role of patience?
A: Wealth-building rewards decades of consistent action.

Q: What is the role of automation?
A: Removes willpower from the equation.

Q: What is the simplest investing approach?
A: Low-cost diversified index funds in tax-advantaged accounts, held long-term.

Q: What is Jack Bogle's contribution?
A: Founder of Vanguard; pioneered low-cost index investing.

Q: What is John (Jack) Bogle's advice?
A: "Don't look for the needle in the haystack. Just buy the haystack."

Q: What is the most overlooked aspect of finance?
A: Behavior and consistency over investment selection.

Q: What is the takeaway of personal finance?
A: Spend less than you earn, save automatically, invest in low-cost diversified assets, repeat for decades.