PERSONAL FINANCE FINAL

Question 1

Personal Finance

Answer 1

all the financial decisions an individual or family must make in order to earn, budget, save, spend, and give money over time

Question 1

Paycheck to Paycheck

Answer 1

an expression used to describe a person or household whose monthly income is devoted to expenses and has little to no savings

Question 2

Interest

Answer 2

the additional cost a lender charges for borrowing their money

Question 3

Net Income

Answer 3

what a person earns after payroll taxes and other deductions are taken out; often referred to as take-home pay

Question 4

Net Worth

Answer 4

the amount by which the value of a person’s assets exceeds or falls behind the value of their liabilities

Question 5

Budget

Answer 5

a written plan for giving, saving, and spending

Question 6

Gross income

Answer 6

the amount you earn before taxes and other payroll deductions

Question 7

Cash-Flow Statement

Answer 7

a record that summarizes all of the income and outgo (spending) over a certain time period

Question 8

Irregular Income

Answer 8

income that comes in at different amounts or at different times, or both

Question 9

Emergency Fund

Answer 9

a savings account set up specifically to be used to cover financial emergencies

Question 10

Interest Rate

Answer 10

the percentage of principal charged by the lender for the use of its money

Question 11

Accrued Interest

Answer 11

the amount of interest charged on a debt but not yet collected; interest accumulates from the date a loan is issued

Question 12

Compound Growth

Answer 12

the average rate of growth for an investment over time; often expressed as an annual figure

Question 13

Principal

Answer 13

the initial amount of money invested or borrowed​​​​​​​

Question 14

Debt

Answer 14

money owed to another person or company

Question 15

Collateral

Answer 15

something owned (that has value) offered as security on a debt; if the debt is not repaid as agreed, the item is forfeited to the lender

Question 17

Equity

Answer 17

the increase in value of a home over time; the difference between the amount owed and what the home could be sold for​​​​​​​

Question 18

Depreciation

Answer 18

the loss of value of an asset over time​​​​​​​

Question 19

Consumerism

Answer 19

the theory that spending money and consuming goods is good for the economy

Question 20

Marketing

Answer 20

the process of communicating the value of a product or service to customers

Question 21

Opportunity Cost

Answer 21

the financial opportunity that is lost when you choose to do something else with your money

Question 22

Identity theft

Answer 22

the act of fraudulently gaining and using the personal information of someone else, usually for financial gain

Question 23

Credit Unions

Answer 23

nonprofit financial institutions that are owned and operated by their members; offer deposit accounts and lending services similar to a retail bank but at a lower cost​​​​​​​

Question 24

Overdraft Protection

Answer 24

an option offered by banks to cover overspending an account and then charge a fee for it​​​​​​​

Question 25

Liquidity

Answer 25

how quickly you can access the money in an account or the value of an asset without a penalty or fee

Question 26

Direct Deposit

Answer 26

option to allow automatic electronic deposit of your payroll checks​​​​​​​

Question 27

Insurance

Answer 27

an arrangement in which an individual will receive financial protection or reimbursement
of losses from an insurer

Question 28

Premium

Answer 28

the amount of money paid for an insurance policy​​​​​​​

Question 29

Health Savings Account (HSA)

Answer 29

a tax-exempt savings account dedicated to health care costs; only available for individuals on a high-deductible health plan (HDHP)

Question 30

Deductible

Answer 30

the amount of money you will pay out of pocket before the insurance company will make a payment​​​​​​​

Question 31

Beneficiaries

Answer 31

people who are designated by the policyholder to receive the death benefit of a life insurance policy

Question 32

Withholdings

Answer 32

the portion of an employee’s pay held back to cover taxes and other deductions​​​​​​​

Question 33

Income Tax

Answer 33

tax paid out by anyone who earns an income

Question 34

Standard Deduction

Answer 34

the dollar amount people can subtract from their income before the tax is calculated

Question 35

Audit

Answer 35

an official IRS inspection of a tax return to make sure the income and deductions are accurate

Question 36

Sales tax

Answer 36

a tax on goods and services that goes to a state or local government ​​​​​​​