Ch1 & Ch2 Vocab & important terms
2/13/26 10:56 AM
Ch 1 Vocab & Review
The Financial Process
- Being rich means many thing to different people, some associate it w/ not having to worry about paying bills while others do worry about
paying bills. For some it can mean donating to organizations that make a difference in society
- An Opportunity Fund
□ expanding your income & investing in yourself with an advanced degree
- Personal Financial Planning
□ The process of managing your money to achieve personal economic satisfaction
- Financial Literacy
□ The use of knowledge & skills for earning, saving, spending & investing to achieve personal, family & community goals
□ Leads to financial well being & a life time of financial security allowing to adapt to changes in your personal economic circumstances,
these advantages
The Financial Process in Short
1. Spending
a. Daily expenses, major expensive and recreational Activities
2. Saving
a. For emergencies & Long-term financial security
3. Sharing
i. For local and global programs to assist those in need
Determine your current financial situation
Step 1: Determine income, savings, living expenses and debts
Step 2: Develop Financial goals
Step 3: Identify alternative courses of action
Step 4: Evaluate your alternative
The consequences of choices
- Opportunity cost
□ What do you give up by making a choice
- Evaluating risk
○ Selecting a college major can involve risk, What if you end up not liking your job?
Step 5: Create & implement your financial action plan
Step 6: Review & Revise your plan
- Over the course of 6 months to a year review
Influences on Personal Financial Planning
- Life Situations & Personal Values
○ As society changes so do a persons financial needs
- The Adult Life Cycle
○ The stages in a family situation & financial needs of an adult are affected by
§ Martial Status, household size, employment & Life mile stones
- Values
○ The idea’s & principles that you consider to be correct, desirable and/or important
The Financial System & Economic Factors
- The financial system & daily economic activities that influence a persons financial decisions, money flows from providers of funds to user of
funds through financial intermediaries & financial markets
Global Influences
- Our economy is affected by both finance activities of foreign investors & global competition from global companies, the U.S. competes w/
them for the spending dollar of consumers
Economic Conditions
1. Consumer Price inflations - The general level of prices
2. Consumer Spending - The total demand for good & services in the economy
3. Interest Rates - Consumer, saving & investing increase the supply interest & decrease when businesses, govt & foreign borrowing
increase money & interest rates
Financial Planning
- Track daily spending to develop a budget
- Create a regular & emergency savings
- Establish a plan for banking & credit usage
- Pay off any college loans
- Continue proper spending & credit habits
Next Steps
- Asses progress towards long term goals
- Evaluate needed insurance for both the home changes and/or financial situation
Later Steps
- Assess needs for long-term financial goals
- Review your will & estate plan
- Consider activities & locations for retirement
Developing personal finance goals
- Types of financial goals
○ Timeframe - Set amount of time needed to achieve a goal
○ Financial needs - drives your goal
- Timing of goals
○ Short-term goals
○ Intermediate goals
○ Long-term goals
○ Both long-term and short term goals should be coordinated
- Goal frequency
○ The amount of times you achieve a goal
Goals for different financial needs
- Consumable product Goals
○ Occur on a periodic basis & involve items used relatively quickly
- Durable Product Goals
○ Infrequent purchases, usually expensive like appliances, cars or sports equipment, items that are tangible
- Intangible Purchases
○ Goals that relate to personal relationships, health, education & leisure
Goal Setting Guidelines
- Goals are a foundation of planning, implementing & measuring progress of spending, saving & investing. Use S.M.A.R.T
S. Specific - know exactly what your goals are & create a plan to achieve them
M. Measurable - using specific numeric amounts, i.e. saving $300 in the span of 3 months
A. Action Orientated - Personal financial activities i.e. reducing credit card usage to manage credit card debt
R. Realistic - Selecting goals based on income & life situation
T. Time based - Indicating a time frame to achieve a goal over a period of time & allows you to measure your goal
Opportunity Costs & Time Value of Money
- Opportunity Costs
- Personal Opportunity Costs
- Health
Financial Opportunity Costs
- Time value of money - The calculated interest in the amount of money as a result of interest earned
- Opportunity cost of the value of money is present in financial decisions
Interest Calculations
There are 5 methods of used to calculate present & future values
1. Formula
A. Math notations are used to compute future & present value
2. Time Value Money Tables
A. Used for easier calculations before the formula method
3. Financial Calculator
A. specialized calculators programed with financial functions used for easier calculations
4. Spreadsheet software
A. Excel and other programs have built in formulas for financial computation, including future and present value
5. Websites and apps
A. Value of money calculators are available online to mobile devices. They can calculate future value of savings as well as loan
payment amounts
Future value of a single amount
- Future value
○ The amount to current savings will grow based on certain interest rates and certain time periods
§ Future value = 100 + (100 x 0.04 x 1 yr) + 104
□ FV = $100 + ( $100 x 0.04% x 1yr ) + 104
- Financial calculator index
○ FV - Future Value
○ I - Interest rate
○ N - # of time periods
○ PV - Potential Value
○ TVM - Time Value of Money
- Future Value of a series of deposits
○ Annuity - a series of equal deposits or payments (must be a consistent rate)
○ I.E. $50 deposit x 7% x 6yrs
□ (money)(percent)(time)
Ch 2 Vocab & Review
The Financial Process in Short
1. Spending
a. Daily expenses, major expensive and recreational Activities
2. Saving
a. For emergencies & Long-term financial security
3. Sharing
a. For local and global programs to assist those in need
- Aptitude
○ Natural abilities that people posses i.e. being able to work well w/ numbers, problem solving, creativity and/or physical dexterity
- Interest Inventories
○ Help determine activities that give you satisfaction in various work situations for those who have great social skills and interacting w/
other people
- Social Influences
○ Demographic trends
§ Single parents are more likely to work in the food service industry and/or child care
- Economic Conditions
○ Interest rates, Inflation & Consumer demands
Networking
- The process of making & using contacts to obtain & update career info. 70% of professionals find positions through contacts, responding
to job ads accounts for 15% of jobs, the main sources of networking
- Job Advertisements
○ Job ads were previously found in the news papers & printed media, some still exist but are now online. In addition to newspaper
website, check for positions offered through community job listings, campus career office & online resources
- Networking & Career Fairs
○ Utilize personal and business contacts, they are important sources of employment opportunities, from campus careers, alumni
networks and job listings. Websites like indeed, Vault, Zip Recruiter and Handshake w/ a focus on college students
- Employment Agencies
○ For profit organizations that help you find a job, be weary of paying their fees. A paid fee doesn’t guarantee a job. Govt supported
services are also available through your state’s Dept of Labor
- Job Creation
○ Developing an employment position that matches your skills w/ the needs of an organization, as your skills develop you might create a
demand for your services
- Comparing Benefits
○ Market Value
§ The monetary value of employee benefits
□ The cost of the benefits IF you had to pay for them
○ Future Value
§ Your ability to asses long term worth of employee benefits
○ Tax exempt
§ When you don’t pay taxes on your income
○ Tax deferred
§ Requires payment of income taxes in the future
- Training Opportunities
○ Continue to learn about new technologies, diverse cultures, management strategies & global businesses
○ Formal Trainings include:
§ Company programs, seminars, webinars, graduate programs & advanced college courses
○ Informal Methods:
§ Reading, open discussions w/ colleagues, webinars in your field of business, economic, social trends & off the clock meetings w/
others
Resumes, Cover letters & Interviews
- Resume Elements
1. The personal data sections
○ A heading including name, phone number, email & mailing address if required
2. The Career Profile summary section
○ A synopsis of your skills & experience
3. Your Education
○ Dates of schools attended, field of study & degree’s earned. Course directed info in relation to field of study like; research, team
projects & presentations
4. Your Experience
○ List organizations & dates of service, responsibilities from previous employment, work related school activities, community services
done, note any computer skills and/or technical abilities of any kind
Use S.T.A.R.
A. Situation or setting
1. Serves as fund-raising for a certain goal
B. Task your duties
1. Prep a plan to raise funds for a social agency
C. Actions you took
1. Administered a team to ask for donations
D. Results
1. The amount of your goal to donate to a certain organization
i. I.e. $1,000 to the homeless shelter
References
- A list of people who can verify your work abilities & competencies
○ These people can be teachers, previous employers, supervisors and/or business colleagues - although not usually shown on a resume
be sure to have names, titles, organizations, phone numbers & work addresses
Types of resumes
- Chronological
○ Shows education & experience in reverse order is most used
- Functional
○ More used for those w/ diverse skills & time gaps in there experience like communications, supervision, project planning etc
○ This type of resume is mostly used when changing careers or positions/titles
When preparing your resume online be sure to:
- Keep the format simple
- Avoid adding attachment files that might be difficult to open
- Use key words specific to your industry
- Submit online applications using plain text
- Be sure the date is accurate you don’t want your previous/potential employer thinking this application/resume is an old one
FOCUS
Fit - Communicate your sustainability for the company
Objective - Present a goal of your desire & interest in the company
Connect - Provide examples of accomplishments that will benefit you
Unique - Emphasize your distinctive qualities & experiences
Skills - Relate your abilities to company needs & industry trends
Key Things to Remember to prep a cover letter:
- Prep a personalized cover letter
- Email or address the letter to the appropriate person
○ In the subj line add email, job title & the position your applying for
- Emphasize your fit for the position & your desire to work for this industry
- Communicate how your skills will serve the needs of the organization
The Job Interview
- Preparing for the Interview
- A pre interview action to have ready is to ask questions
- Prep w/ mock interviews
2/13/26 10:56 AM
Ch 1 Vocab & Review
The Financial Process
- Being rich means many thing to different people, some associate it w/ not having to worry about paying bills while others do worry about
paying bills. For some it can mean donating to organizations that make a difference in society
- An Opportunity Fund
□ expanding your income & investing in yourself with an advanced degree
- Personal Financial Planning
□ The process of managing your money to achieve personal economic satisfaction
- Financial Literacy
□ The use of knowledge & skills for earning, saving, spending & investing to achieve personal, family & community goals
□ Leads to financial well being & a life time of financial security allowing to adapt to changes in your personal economic circumstances,
these advantages
The Financial Process in Short
1. Spending
a. Daily expenses, major expensive and recreational Activities
2. Saving
a. For emergencies & Long-term financial security
3. Sharing
i. For local and global programs to assist those in need
Determine your current financial situation
Step 1: Determine income, savings, living expenses and debts
Step 2: Develop Financial goals
Step 3: Identify alternative courses of action
Step 4: Evaluate your alternative
The consequences of choices
- Opportunity cost
□ What do you give up by making a choice
- Evaluating risk
○ Selecting a college major can involve risk, What if you end up not liking your job?
Step 5: Create & implement your financial action plan
Step 6: Review & Revise your plan
- Over the course of 6 months to a year review
Influences on Personal Financial Planning
- Life Situations & Personal Values
○ As society changes so do a persons financial needs
- The Adult Life Cycle
○ The stages in a family situation & financial needs of an adult are affected by
§ Martial Status, household size, employment & Life mile stones
- Values
○ The idea’s & principles that you consider to be correct, desirable and/or important
The Financial System & Economic Factors
- The financial system & daily economic activities that influence a persons financial decisions, money flows from providers of funds to user of
funds through financial intermediaries & financial markets
Global Influences
- Our economy is affected by both finance activities of foreign investors & global competition from global companies, the U.S. competes w/
them for the spending dollar of consumers
Economic Conditions
1. Consumer Price inflations - The general level of prices
2. Consumer Spending - The total demand for good & services in the economy
3. Interest Rates - Consumer, saving & investing increase the supply interest & decrease when businesses, govt & foreign borrowing
increase money & interest rates
Financial Planning
- Track daily spending to develop a budget
- Create a regular & emergency savings
- Establish a plan for banking & credit usage
- Pay off any college loans
- Continue proper spending & credit habits
Next Steps
- Asses progress towards long term goals
- Evaluate needed insurance for both the home changes and/or financial situation
Later Steps
- Assess needs for long-term financial goals
- Review your will & estate plan
- Consider activities & locations for retirement
Developing personal finance goals
- Types of financial goals
○ Timeframe - Set amount of time needed to achieve a goal
○ Financial needs - drives your goal
- Timing of goals
○ Short-term goals
○ Intermediate goals
○ Long-term goals
○ Both long-term and short term goals should be coordinated
- Goal frequency
○ The amount of times you achieve a goal
Goals for different financial needs
- Consumable product Goals
○ Occur on a periodic basis & involve items used relatively quickly
- Durable Product Goals
○ Infrequent purchases, usually expensive like appliances, cars or sports equipment, items that are tangible
- Intangible Purchases
○ Goals that relate to personal relationships, health, education & leisure
Goal Setting Guidelines
- Goals are a foundation of planning, implementing & measuring progress of spending, saving & investing. Use S.M.A.R.T
S. Specific - know exactly what your goals are & create a plan to achieve them
M. Measurable - using specific numeric amounts, i.e. saving $300 in the span of 3 months
A. Action Orientated - Personal financial activities i.e. reducing credit card usage to manage credit card debt
R. Realistic - Selecting goals based on income & life situation
T. Time based - Indicating a time frame to achieve a goal over a period of time & allows you to measure your goal
Opportunity Costs & Time Value of Money
- Opportunity Costs
- Personal Opportunity Costs
- Health
Financial Opportunity Costs
- Time value of money - The calculated interest in the amount of money as a result of interest earned
- Opportunity cost of the value of money is present in financial decisions
Interest Calculations
There are 5 methods of used to calculate present & future values
1. Formula
A. Math notations are used to compute future & present value
2. Time Value Money Tables
A. Used for easier calculations before the formula method
3. Financial Calculator
A. specialized calculators programed with financial functions used for easier calculations
4. Spreadsheet software
A. Excel and other programs have built in formulas for financial computation, including future and present value
5. Websites and apps
A. Value of money calculators are available online to mobile devices. They can calculate future value of savings as well as loan
payment amounts
Future value of a single amount
- Future value
○ The amount to current savings will grow based on certain interest rates and certain time periods
§ Future value = 100 + (100 x 0.04 x 1 yr) + 104
□ FV = $100 + ( $100 x 0.04% x 1yr ) + 104
- Financial calculator index
○ FV - Future Value
○ I - Interest rate
○ N - # of time periods
○ PV - Potential Value
○ TVM - Time Value of Money
- Future Value of a series of deposits
○ Annuity - a series of equal deposits or payments (must be a consistent rate)
○ I.E. $50 deposit x 7% x 6yrs
□ (money)(percent)(time)
Ch 2 Vocab & Review
The Financial Process in Short
1. Spending
a. Daily expenses, major expensive and recreational Activities
2. Saving
a. For emergencies & Long-term financial security
3. Sharing
a. For local and global programs to assist those in need
- Aptitude
○ Natural abilities that people posses i.e. being able to work well w/ numbers, problem solving, creativity and/or physical dexterity
- Interest Inventories
○ Help determine activities that give you satisfaction in various work situations for those who have great social skills and interacting w/
other people
- Social Influences
○ Demographic trends
§ Single parents are more likely to work in the food service industry and/or child care
- Economic Conditions
○ Interest rates, Inflation & Consumer demands
Networking
- The process of making & using contacts to obtain & update career info. 70% of professionals find positions through contacts, responding
to job ads accounts for 15% of jobs, the main sources of networking
- Job Advertisements
○ Job ads were previously found in the news papers & printed media, some still exist but are now online. In addition to newspaper
website, check for positions offered through community job listings, campus career office & online resources
- Networking & Career Fairs
○ Utilize personal and business contacts, they are important sources of employment opportunities, from campus careers, alumni
networks and job listings. Websites like indeed, Vault, Zip Recruiter and Handshake w/ a focus on college students
- Employment Agencies
○ For profit organizations that help you find a job, be weary of paying their fees. A paid fee doesn’t guarantee a job. Govt supported
services are also available through your state’s Dept of Labor
- Job Creation
○ Developing an employment position that matches your skills w/ the needs of an organization, as your skills develop you might create a
demand for your services
- Comparing Benefits
○ Market Value
§ The monetary value of employee benefits
□ The cost of the benefits IF you had to pay for them
○ Future Value
§ Your ability to asses long term worth of employee benefits
○ Tax exempt
§ When you don’t pay taxes on your income
○ Tax deferred
§ Requires payment of income taxes in the future
- Training Opportunities
○ Continue to learn about new technologies, diverse cultures, management strategies & global businesses
○ Formal Trainings include:
§ Company programs, seminars, webinars, graduate programs & advanced college courses
○ Informal Methods:
§ Reading, open discussions w/ colleagues, webinars in your field of business, economic, social trends & off the clock meetings w/
others
Resumes, Cover letters & Interviews
- Resume Elements
1. The personal data sections
○ A heading including name, phone number, email & mailing address if required
2. The Career Profile summary section
○ A synopsis of your skills & experience
3. Your Education
○ Dates of schools attended, field of study & degree’s earned. Course directed info in relation to field of study like; research, team
projects & presentations
4. Your Experience
○ List organizations & dates of service, responsibilities from previous employment, work related school activities, community services
done, note any computer skills and/or technical abilities of any kind
Use S.T.A.R.
A. Situation or setting
1. Serves as fund-raising for a certain goal
B. Task your duties
1. Prep a plan to raise funds for a social agency
C. Actions you took
1. Administered a team to ask for donations
D. Results
1. The amount of your goal to donate to a certain organization
i. I.e. $1,000 to the homeless shelter
References
- A list of people who can verify your work abilities & competencies
○ These people can be teachers, previous employers, supervisors and/or business colleagues - although not usually shown on a resume
be sure to have names, titles, organizations, phone numbers & work addresses
Types of resumes
- Chronological
○ Shows education & experience in reverse order is most used
- Functional
○ More used for those w/ diverse skills & time gaps in there experience like communications, supervision, project planning etc
○ This type of resume is mostly used when changing careers or positions/titles
When preparing your resume online be sure to:
- Keep the format simple
- Avoid adding attachment files that might be difficult to open
- Use key words specific to your industry
- Submit online applications using plain text
- Be sure the date is accurate you don’t want your previous/potential employer thinking this application/resume is an old one
FOCUS
Fit - Communicate your sustainability for the company
Objective - Present a goal of your desire & interest in the company
Connect - Provide examples of accomplishments that will benefit you
Unique - Emphasize your distinctive qualities & experiences
Skills - Relate your abilities to company needs & industry trends
Key Things to Remember to prep a cover letter:
- Prep a personalized cover letter
- Email or address the letter to the appropriate person
○ In the subj line add email, job title & the position your applying for
- Emphasize your fit for the position & your desire to work for this industry
- Communicate how your skills will serve the needs of the organization
The Job Interview
- Preparing for the Interview
- A pre interview action to have ready is to ask questions
- Prep w/ mock interviews
