Financial Terms Flashcards
Income
The amount of money a person earns regularly, typically from a job.
Expenses
The money spent on goods and services to meet one’s needs and wants
Rent and Taxes are
Fixed Expenses
Savings
Money set aside for future use or unexpected expenses.
Fixed Expenses
Regular, predictable expenses that remain relatively constant each month (e.g., rent, mortgage).
Variable Expenses
Expenses that can vary from month to month (e.g., groceries, entertainment).
Emergency Fund
A fund set aside to cover unexpected financial emergencies, providing a financial safety net.
Discretionary Spending
Spending on non-essential items or activities that enhance lifestyle and enjoyment.
Financial Goals
Specific financial objectives or targets set to achieve a desired outcome
Debt
Money owed to lenders, often with interest, requiring repayment over time.
Net Income
The amount of money a person has after taxes and other deductions are taken out of their gross income.
Credit Score
A numerical representation of a person’s creditworthiness, influenced by their credit history, outstanding debts, and payment behavior.
Investments
Financial assets purchased with the expectation that they will generate income or appreciate in value over time.
Interest
The cost of borrowing money or the return on investment, typically expressed as a percentage.
Credit Card
A plastic card allowing the holder to make purchases on credit, with the obligation to repay the amount borrowed.
Needs vs wants
Distinguishing between essential items required for survival (needs) and non-essential items that enhance the quality of life (wants).
Inflation
The gradual increase in the prices of goods and services over time, reducing the purchasing power of money.
Financial Planner
A professional who helps individuals and families create financial plans based on their goals and circumstances.
Credit Utilization
The ratio of credit card balances to credit limits, impacting a person’s credit score.
Budget Surplus
When income exceeds expenses in a budget, leaving room for savings or discretionary spending.
Budget Deficit
When expenses exceed income in a budget, potentially leading to a debt or financial stress.
Compounding Interest
Earning interest not only on the initial investment but also on the interest that accumulates over time.
Fico Score
A specific type of credit score commonly used by lenders to assess credit risk.
Assets
Owning something of value that is able to meet a debt, this could be a property, ownership in funds or investments, or caluable items such as antiques or jewerely.
Beneficiary
Someone who will benefit form something such as a trust, a will or a life insurance policy
Bond
Loans that governments and companies will take out.
CPP- CANADA PENSION PLAN
Social program that gives retirees a pension income after they have retired based on how much money they have contributed as they are working.
- Some workplaces will have their own pension plan as well
Credit Limit
Limit placed on someone’s credit card account that limits how much they could and should spend - generally based on reliability of the individual
* Only spend 30-50% of it each month and pay back on time to build good credit
EI- Employment Insurance
“A government program that provides temporary benefit payments to employees who cannot work because of layoff, because they are upgrading their skills or looking for work, or who are sick, pregnant or caring for a newborn or adopted child.”
Equity
The shares given out by a company that represents ownership stake in that company
Financing
Arrangements to secure funds so that a person can make a purchase, generally in the form of a loan or a credit (owe money to whoever is covering the initial cost with a promise to pay them back)
Growth Fund
A fund that has an objective to generate capital (money) appreciation over time (goes up in monetary value) and generally holds equities (stocks)
Life Insurance
Policy providing a benefit payment to named beneficiaries in the event of the death of the person covered
Line of Credit
Credit that offers immediate access to part or all of a pre-determined amount of cash upon demand.
- Can be secured with personal assets - bonds, deposits, equity in a home
Mortgage
Loan secured by property
Mutual Fund
A portfolio of investments run by professionals, people become investors in the fund
Portfolio
Group of investments held by one person
Rent
Amount paid monthly to a landlord from a tenant to live in a space owned by the landlord
