Personal Finance Basic Terms Flashcards
Financial Security
is the ability to meet essential needs without taking on more debt than you can pay
Financial Planning
Helps reach important goals and financial security over lifetime
Financial Literacy
Is possessing and applying financial knowledge to make informed and responsible financial choices
Management
Using your resources to achieve predetermined objectives Management involves: -identifying resources -Setting goals -Making decisions Solving Equations -Evaluating the results
Goods
Are tangible items that can be purchased
Services
intangible activities that another person usually performs for a fee
Needs
Necessities
- Physical Needs (food, clothing, shelter)
- Psychological needs (safety, security, love acceptance, approval, and success)
Wants
Things you would like but are not essential
Value
Are your beliefs about what is important and desirable
Value System
Is the overall structure of values and goals that guides your behavior
Ethics
Are the moral principles or beliefs that direct a person’s behavior
- Ethical behavior is important in personal relationships and in business and government
- Honesty, fairness reliability, respect, courage, tolerance, civility, and compassion
- Unethical behavior is usually considered wrong and is sometimes illegal
Goal
Objective you want to attain
- “to be” goals are related to personal and character (smart, reliable, career goals, etc.)
- “to do” goals are things you want to accomplish (play piano, go to college, clean your closet, etc.)
- “To have” goals continually change (New clothes, new car, new phone, etc.)
Short term goals
Takes less than a year to achieve
Medium- term goals
May take one to three years to achieve
Long-term goals
may take several years to achieve
Interdependent Goal
A goal you have to achieve in order to reach another goal
Conflicting goals
Cannot all be achieved; you must decide which of the goals is more important to you
Priority
Is a value or goal that is given more importance than other value and goals
Standard
Is an established measure of quality, value, or quantity
- You can set standards for the way you want to live, what you want to do, and what you want to buy
- Your standards depend on your values and goals
Resources
Tools that you can use to reach your goals
- Human resources are internal (knowledge, experience, skills, motivations, ect.)
- Non human resources are external (money, time, equipment)
- Scarce
- Manageable
- Related to one another
