PERSONAL FINANCE FINAL 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
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
Interest
the additional cost a lender charges for borrowing their money
Net Income
what a person earns after payroll taxes and other deductions are taken out; often referred to as take-home pay
Net Worth
the amount by which the value of a person’s assets exceeds or falls behind the value of their liabilities
Budget
a written plan for giving, saving, and spending
Gross income
the amount you earn before taxes and other payroll deductions
Cash-Flow Statement
a record that summarizes all of the income and outgo (spending) over a certain time period
Irregular Income
income that comes in at different amounts or at different times, or both
Emergency Fund
a savings account set up specifically to be used to cover financial emergencies
Interest Rate
the percentage of principal charged by the lender for the use of its money
Accrued Interest
the amount of interest charged on a debt but not yet collected; interest accumulates from the date a loan is issued
Compound Growth
the average rate of growth for an investment over time; often expressed as an annual figure
Principal
the initial amount of money invested or borrowed
Debt
money owed to another person or company
Collateral
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
Equity
the increase in value of a home over time; the difference between the amount owed and what the home could be sold for
Depreciation
the loss of value of an asset over time
Consumerism
the theory that spending money and consuming goods is good for the economy
Marketing
the process of communicating the value of a product or service to customers
Opportunity Cost
the financial opportunity that is lost when you choose to do something else with your money
Identity theft
the act of fraudulently gaining and using the personal information of someone else, usually for financial gain
Credit Unions
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
Overdraft Protection
an option offered by banks to cover overspending an account and then charge a fee for it
Liquidity
how quickly you can access the money in an account or the value of an asset without a penalty or fee
Direct Deposit
option to allow automatic electronic deposit of your payroll checks
Insurance
an arrangement in which an individual will receive financial protection or reimbursement
of losses from an insurer
Premium
the amount of money paid for an insurance policy
Health Savings Account (HSA)
a tax-exempt savings account dedicated to health care costs; only available for individuals on a high-deductible health plan (HDHP)
Deductible
the amount of money you will pay out of pocket before the insurance company will make a payment
Beneficiaries
people who are designated by the policyholder to receive the death benefit of a life insurance policy
Withholdings
the portion of an employee’s pay held back to cover taxes and other deductions
Income Tax
tax paid out by anyone who earns an income
Standard Deduction
the dollar amount people can subtract from their income before the tax is calculated
Audit
an official IRS inspection of a tax return to make sure the income and deductions are accurate
Sales tax
a tax on goods and services that goes to a state or local government
