Many people don’t have the slightest idea when it comes to financial concepts when they are faced with making any financial decision. If you don’t have the concepts then most likely you will end up making the wrong move. Finances are important, and they will help us with all our needs. And so many people work hard so that by the end of their career they will have relaxing retirement days. So if they have no idea of the financial concepts, it will not benefit them in any way even if they save as much as they can. Below is a list of the best financial concepts.

Effective tax rate

The effective tax rate means that you combine the state and federal income taxes that you have achieved in a year. The calculation should start with the federal return, the take the adjusted gross income of the exact federal return then divide it by the actual federal return.  If the state income has the income tax, then you should do the same too.

The result that you will get will be in the form a decimal that you can quickly change to a percentage. So that to get the effective tax rate then you should add the two together. The percentage of the state and federal.

Debt snowballing

The debt snowballing is all about listing all the debt that you might be having. It’s not the debt alone that’s listed, but the interest rate that will be paid for both and the least amount payment. Then you should calculate how long you will manage to pay off all of them. To make things easy for you just start with the smallest debt then rise, or start with the one that has a high-interest rate. There are apps on the internet that will help with the calculation just look for “debt payoff calculator.”

Guaranteed

Having something guaranteed then it will mean that you don’t have to worry about the risk because it will be risk-free but at the same time it might not be true. It depends on where the guarantee is coming from and if that person will be able to back it up. The way to go about this is looking at the terms and conditions that spell out precisely this.

Like at the insurance that guarantee monthly payments when it comes to an annuity. If it’s not spelled like this at the terms and conditions, then you are at risk. For more information on the best financial concepts, watch the video below;