personal finance chapter 1 Flashcards
Personal Finance
all the financial decisions an individual or family must make in order 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
an expression used to describe a person or household whose monthly income is devoted to expenses and has little to no savings
Credit
the granting of a loan and the creation of debt; any form of deferred payment
Interest Rate
the percentage of principal charged by the lender for use of its money
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
a plan of action that allows a person to meet not only their immediate needs but also their long-term goals
Net Worth
the amount by which the value of a person’s assets exceeds or falls behind the value of their liabilities
Asset
anything that is owned by an individual, including money in the bank or investments
Liability
financial debts or obligations
Positive Net Worth
the dollar value of a person’s assets is greater than the dollar value of their liabilities
Negative Net Worth
the dollar value of a person’s liabilities is larger than the value of their assets
Net Income
what a person earns after payroll taxes and other deductions are taken out; often referred to as take-home pay
