Chapter 1 Vocab Flashcards
personal financial planning
the process of managing your money to achieve personal economic satisfaction
values
ideas and principles that a person considers correct, desirable, and important
opportunity cost
what a person gives up by making a choice
adult life cycle
the stages in the family situation and financial needs of an adult
life cycle approach
the idea that average person goes through four basic stages in personal financial management
economics
the study of how wealth is created and distributed `
inflation
a rise in the general level of prices
simple interest
interested computed on the principal, excluding previously earned interest
compounding
a process that calculates interest based on previously earned interest
future value
the amount to which current savings will increase based on a certain interest rate and a certain time period; typically invovles compounding
annuity
a series of equal amounts made at regular time intervals
present value
the current value for a future amount based on a certain interest rate and a certain time period; also referred to as discounting
liquidity
the ability to readily convert financial resources into cash without a loss in value
bankruptcy
a set of federal laws that allow you to either restructure your debts or remove certain debts `
financial plan
a formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities
