Personal Finance- All Chapters Latest Update Graded A

Personal Finance- All Chapters Latest Update Graded A Consumer A person or organization that uses a product or service Credit The granting of a loan and the creation of debt; any form of deferred payment Debt An obligation of repayment owed by one party (the debtor/borrower) to a second party (the creditor/lender); in most cases this includes repayment of the original loan amount plus interest Economy A system by which goods and services are produced and distributed Financial literacy The knowledge and skillset necessary to be an informed consumer and mange finances effectively Interest A fee paid by a borrower to the lender for the use of borrowed money; typically interest is calculated as a percentage of the principal (original loan amount) Loan A debt evidenced by a "note," which specifies the principal amount, interest rate and date of repayment Personal finance All of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, etc. The Five Foundations The five steps to financial success Interest Rate A rate which is either charged (on debt) or paid (on investment accounts) for the use of money Sinking Fund Saving money over time for a large purchase Compound Interest Interest paid on interest previously earned Emergency Fund A savings account that is set aside to be used only for emergency expenses Inflation The persistent increase in the cost of goods and services or the persistent decline in the purchasing power of money Interest-Bearing Account An account that generates interest income on the available balance in the account Budget A written cash flow plan Cash flow statement A summary that shows total income and spending for a given time period Carbon check A copy of each check you write Envelope System Series of envelopes that are divided into categories and are used to store cash for planned monthly expenses Impulse purchase An item that is bought without previous planning or consideration of the long-term effects Overdraft Occurs when money is withdrawn from a bank account and the available balance goes below zero Reconcile To match your bank statement with your checkbook Zero-Based Budget A cash flow plan that assigns an expense to every dollar of your income, wherein the total income minus the total expenses equals zero Annual percentage rate Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan Depreciation A decrease or loss in value Credit report A detailed report of an individual's credit history Loan term Time frame that a loan agreement is in force, and before or at the end of which the loan should either be repaid or renegotiated for another term Credit card Type of card issued by a bank that allows users to finance a purchase Credit score A measure of an individual's credit risk; calculated from a credit report using a standardized formula Annual fee A yearly fee that's charged by the credit card company for the convenience of the credit card Debt snowball Preferred method of debt repayment; includes a list of all debts organized from smallest to largest balace; minimum payments are made to all debts except for the smallest, which is attacked with the largest possible payments Branding The promotion of a product or service by identifying it with distinct characteristics Brand recognition/awareness Refers to the public's ability to recall and recognize a brand by its logo, jingles, packaging, etc. Buyer's remorse Feeling regret or concern after making a large purchase Caveat Emptor Latin term for "buyer beware" Financing To buy an item with credit; paying overtime Marketing The process of communicating the value of a product or service to costumers Opportunity cost Refers to the financial opportunity that is given up because you choose to do something else with your money Significant Purchase An amount of money you spend, usually $300, that causes some pain to part with Auction A public sale in which property or items of merchandise are sold to the highest bidder Consignment shop Retail store where people sell items and the owner of the shop gets a percentage of the sale Cost-benefit analysis The process of quantifying costs and benefits of a decision Estate sale Type of yard sale with more items, usually the entire contents of a household Foreclosure Process by which the holder of a mortgage sells the property of a homeowner who has not made interest and/or principal payments on time as stipulated in the mortgage contract Integrity Having to do with a person's honesty and moral attributes Markup The difference between the wholesale price and retail price Negotiate To bargain for a lower price Walk-away power The ability to walk away from a purchase when negotiating Diversification The practice of dividing the money a person invests between several different types of investments in order to lower risk Investing The process of setting money aside to increase wealth over time for long-term financial goals such as retirement Investment Account or arrangement in which a person puts his/her money for long-term growth; invested money should not be used for a suggested minimum of five years Liquidity Quality of an asset that permits it to be converted quickly into cash without loss of value; availability of money Risk Degree of uncertainty of return on an asset; in business, the likelihood of loss or reduced profit Risk-return ratio Relationship of substantial reward compared to the amount of risk taken Share Piece of ownership in a company, mutual fund or other investment Stocks Securities that represent part ownership or equity in a corporation Tax-favored dollars Money that is invested, either tax deferred or tax free within a retirement plan 401(k) A retirement savings plan offered by a corporation to its employees; the employee contributes money from his/her gross pay, and the money grows tax deferred IRA Tax-deferred arrangement for individuals with earned income; individual retirement arrangement Mutual fund Pool of money managed by an investment company and invested in multiple companies Portfolio List of your investments Accountability The quality or state of being responsible, liable or answerable Free Spirit A person who thinks that everything will work out fine and typically hates to deal with the details Nerd A person who is picky about budgeting and details Time poverty A situation in which a person is lacking time, which leads to stress Value system A person's priorities, beliefs and standards that affects how he or she views the world Earned income Any income that is generated by working Income tax Tax paid out by anyone who earns an income Passive income Money earned on a regular basis with little or no effort required to maintain it (real estate, internet content) Personal branding The process by which we "market" ourselves to others; involves highlighting personal strengths, interests and unique qualities and identifying goals Portfolio income Income generated by selling an investment at a higher price than you paid for it Property taxes Taxes paid by anyone who owns property such as land, a home or commercial real estate Résumé A brief account of one's professional or work experience and qualifications, often submitted with an employment application Sales tax Tax on goods and services that goes to your state or local government Social Security A federal insurance program funded by taxpayer dollars that provides benefits to people who are retired, unemployed, or disabled Cover letter A letter that is always accompanied by a résumé; used to inform a prospective employer of your interest and capabilities as they relate to a specific employment opportunity FAFSA A form that is completed annually by current and prospective college students to determine their eligibility for financial aid Grant A form of federal or state financial aid that does not need to be repaid; usually given to students who demonstrate financial need Scholarship A form of federal or state financial aid that does not need to be repaid; usually awarded on the basis of academic, athletic, or other achievements Work study A program that allows students to work part time while continuing their studies Beneficiary The recipient of assets passed on from the death of a friend or relatibe Claim Paperwork filed with an insurance company in order to get them to cover a loss for someone they sure Coverage Applies to the amount of protection you have through an insurance company in the event of a loss Deductible Amount you must pay before you begin receiving any benefits from your insurance company Liability The state or quality of being obligated according to law or equity Out-of-pocket expense Specific amount of money that you pay when insurance only covers a portion of costs Policy Describes the type of coverages in an insurance agreement Premium Amount you pay monthly, quarterly, semiannually or annually to purchase different types of insurance Will A legally enforceable declaration of how a person wishes his or her property to be distributed after death Core Values Traits or qualities that represent an individual's highest priorities, deeply held beliefs and motivating forces Legacy Anything handed down from the past, something that someone has achieved that continues to exist after they are gone Nonprofits Organizations that use money raised to achieve their goals rather than distributing them as profit Philanthropy Means "love of humanity"; identifying and exercising one's values in giving and volunteering