Finance ch 1 review vocab

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17 Terms

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Personal Finance
all the financial decisions an individual or family must make in order to earn, budget, save, spend, and give money over time.
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Consumer
a person or organization that uses a product or service.
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Debt
money owed to another person or company.
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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.
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Credit
the granting of a loan and the creation of debt; any form of deferred payment.
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Interest Rate
the percentage of principal charged by the lender for use of its money​​​​​​​.
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Loan Shark
person or entity that charges borrowers interest rates above an established legal rate​​​​​​​.
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Interest
the additional cost a lender charges for borrowing their money.
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Financial Plan
a plan of action that allows a person to meet not only their immediate needs but also their long-term goals.
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Net Worth
the amount by which the value of a person's assets exceeds or falls behind the value of their liabilities.
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Asset
anything that is owned by an individual, including money in the bank or investments.
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Liability
financial debts or obligations.
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Positive Net Worth
the dollar value of a person's assets is greater than the dollar value of their liabilities.
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Negative Net Worth
the dollar value of a person's liabilities is larger than the value of their assets.
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Net Income
what a person earns after payroll taxes and other deductions are taken out; often referred to as take-home pay.
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Expense
the cost of goods or services; money paid out.
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Financial Literacy
the knowledge and skill base necessary for people to be informed consumers and manage their finances effectively.