Personal finance chapter 1 Flashcards
interest rate
the percentage of principal charged by the lender for the use of its money
personal finance
all the financial decisions a person or family makes to earn, budget, save, spend, and give money over time
consumer
a person or organization that uses a product or service
debt
money owed to another person or company
paycheck to paycheck
a person or household whose monthly income is devoted to expenses and has little to no savings
the average borrower has how much money of debt?
over 34,000
personal finance does involve some math, but it is mostly about….
behavior
personal finance is 20% head knowledge and…
80% behavior
credit
the granting of a loan and creation of debt
loan shark
person or entity that charges borrowers interest rates above an established legal rate
interest
the additional cost a lender charges for borrowing their money
financial plan
allows a person to meet not only their immediate needs but also their longterm goals
net worth
the amount by which the value of the persons assets exceeds or falls behind the value of their liabilities
asset
anything owned by an individual
liability
financial debts or obligations
positive net worth
the dollar value of a persons assets is greater than the dollar value of their liabilities
negative net worth
the dollar value of a persons liabilities is larger than the dollar value of their assets
net income
what a person earns after tax and deductions are taken out
expense
the cost of goods or services used to operate a business
first foundation
save a $500 emergency fund
second foundation
get out and stay out of debt
third foundation
pay cash for your car
fourth foundation
pay cash for college
fifth foundation
build wealth and give
financial liability
knowledge and skill necessary for people to be informed consumers and manage their finances effectively
we all have…
money personalities
what is the starting point for a financial plan?
knowing your net worth
always remember that you will manage your money or the lack of it will…
lead to money problems managing you
almost half of all americans report having less than ? in their savings
1,000
what is the total student loan debt owed in the U.S?
1.5 trillion
what is the percentage of americans living paycheck to paycheck?
80%
