Credit Flashcards
Financial Literacy
The ability to understand financial concepts and practices.
Budget
A financial plan that helps estimate and distribute your expenses based on your income.
Income
The financial gain that a person receives.
Expense
The money spent on something.
50/30/20 Rule
A budget that divides an income into needs, wants, and savings.
Types of Expenses
Fixed, variable, Planned, Unplanned.
Variable Expenses
Expenses that aren’t fixed and may change. (Groceries, Household Essentials, Utilities, Clothing)
Fixed Expenses
Expenses that remain fixed on a regular basis.
Planned Expenses
Expenses that you know are coming. (Bills, Insurance, Car Payments, Memberships.)
Unplanned Expenses
Expenses that occur unexpectedly. (Emergencies)
Emergency Fund
A savings account set aside for unplanned expenses.
Paying Yourself First
To create savings goals for future purchases.
Per Unit Pricing
A method that shows how much an item costs per ounce, pound, or per item.
Debt
A financial liability to return goods or services borrowed, typically with interest.
Loan
A type of debt where a lender provides money, which is to be repaid with interest over a specified period of time.
Principal
The initial amount of money borrowed from a loan.
Interest
The cost of borrowing money, and is a percentage of the principal.
Term
The period of time a person is given to repay a loan.
Amortization (Am-er-tuh-zey-shuhn)
The process of paying off debt over time with periodic payments of the principal and interest.
Collateral
An asset of a borrower that is seized by a lender in the case that the borrower fails to repay a loan. (Only in secured loans)
Credit
The ability to receive goods or services before paying for them, with the agreement to pay later.
Credit Score
A rating from 300-850 that estimates how likely someone is to repay debt and pay bills.
Credit Report
A record of someones history managing and repaying debt.
Credit Bureau
A company that collects data based on credit to calculate someones credit score.
