Financial Terms

Question 1

Income

Answer 1

The amount of money a person earns regularly, typically from a job.

Question 2

Expenses

Answer 2

The money spent on goods and services to meet one’s needs and wants

Question 3

Rent and Taxes are

Answer 3

Fixed Expenses

Question 4

Savings

Answer 4

Money set aside for future use or unexpected expenses.

Question 5

Fixed Expenses

Answer 5

Regular, predictable expenses that remain relatively constant each month (e.g., rent, mortgage).

Question 6

Variable Expenses

Answer 6

Expenses that can vary from month to month (e.g., groceries, entertainment).

Question 7

Emergency Fund

Answer 7

A fund set aside to cover unexpected financial emergencies, providing a financial safety net.

Question 8

Discretionary Spending

Answer 8

Spending on non-essential items or activities that enhance lifestyle and enjoyment.

Question 9

Financial Goals

Answer 9

Specific financial objectives or targets set to achieve a desired outcome

Question 10

Debt

Answer 10

Money owed to lenders, often with interest, requiring repayment over time.

Question 11

Net Income

Answer 11

The amount of money a person has after taxes and other deductions are taken out of their gross income.

Question 12

Credit Score

Answer 12

A numerical representation of a person’s creditworthiness, influenced by their credit history, outstanding debts, and payment behavior.

Question 13

Investments

Answer 13

Financial assets purchased with the expectation that they will generate income or appreciate in value over time.

Question 14

Interest

Answer 14

The cost of borrowing money or the return on investment, typically expressed as a percentage.

Question 15

Credit Card

Answer 15

A plastic card allowing the holder to make purchases on credit, with the obligation to repay the amount borrowed.

Question 16

Needs vs wants

Answer 16

Distinguishing between essential items required for survival (needs) and non-essential items that enhance the quality of life (wants).

Question 17

Inflation

Answer 17

The gradual increase in the prices of goods and services over time, reducing the purchasing power of money.

Question 18

Financial Planner

Answer 18

A professional who helps individuals and families create financial plans based on their goals and circumstances.

Question 19

Credit Utilization

Answer 19

The ratio of credit card balances to credit limits, impacting a person’s credit score.

Question 20

Budget Surplus

Answer 20

When income exceeds expenses in a budget, leaving room for savings or discretionary spending.

Question 21

Budget Deficit

Answer 21

When expenses exceed income in a budget, potentially leading to a debt or financial stress.

Question 22

Compounding Interest

Answer 22

Earning interest not only on the initial investment but also on the interest that accumulates over time.

Question 23

Fico Score

Answer 23

A specific type of credit score commonly used by lenders to assess credit risk.

Question 24

Assets

Answer 24

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.

Question 25

Beneficiary

Answer 25

Someone who will benefit form something such as a trust, a will or a life insurance policy

Question 26

Bond

Answer 26

Loans that governments and companies will take out.

Question 27

CPP- CANADA PENSION PLAN

Answer 27

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

Question 28

Credit Limit

Answer 28

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

Question 29

EI- Employment Insurance

Answer 29

“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.”

Question 30

Equity

Answer 30

The shares given out by a company that represents ownership stake in that company

Question 31

Financing

Answer 31

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)

Question 32

Growth Fund

Answer 32

A fund that has an objective to generate capital (money) appreciation over time (goes up in monetary value) and generally holds equities (stocks)

Question 33

Life Insurance

Answer 33

Policy providing a benefit payment to named beneficiaries in the event of the death of the person covered

Question 34

Line of Credit

Answer 34

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

Question 35

Mortgage

Answer 35

Loan secured by property

Question 36

Mutual Fund

Answer 36

A portfolio of investments run by professionals, people become investors in the fund

Question 37

Portfolio

Answer 37

Group of investments held by one person

Question 38

Rent

Answer 38

Amount paid monthly to a landlord from a tenant to live in a space owned by the landlord