Personal Finance Unit 4 Vocab

Financial Plan

A set of personal and financial goals, along with steps and a timeline for reaching them.

Delayed Gratification

Doing without something now in order to be able to pay for something later

Timeline

A visual display of how long it will take to achieve each phase of your financial goals[cite: 5].

Benchmarks

Standards against which progress is measured (steps or actions you will take)[cite: 5].

Financial Advisor

A person trained to help give people advice about how to invest earnings, plan for retirement, and manage financial matters[cite: 6].

Phishing

A common Internet scam that uses email messages to deceive you into disclosing personal information[cite: 9].

Identity Theft

Occurs when someone uses your personal information without permission to commit fraud or other crimes[cite: 10].

Needs

Include food, clothing, and medical care people need to survive[cite: 12].

Wants

Refer to things people desire for reasons beyond survival[cite: 12].

Discretionary Income

The amount that a person has to spend after needs are met[cite: 13].

Wealth

Items of value minus any debts owed for those items[cite: 13].

Financial Resources

Money or other items of value (assets) used to acquire goods and services[cite: 14].

Personal Cash Flow Statements

Lists your cash inflows and cash outflows for a period of time[cite: 15].

Cash Inflows

Include income that you receive from your job, investments, and other sources[cite: 15].

Cash Outflows

Expenses, or items that you spend money on such as rent, phone bill, and car expenses[cite: 15].

Assets

Money and items of value that you own[cite: 16].

Appreciating Assets

Assets that grow in value (ex. savings bond, value of land or home)[cite: 16].

Depreciating Assets

Assets that decrease in value (ex. cars and electronic devices)[cite: 16].

Liabilities

Debts that you owe (ex. what you owe on a car loan)[cite: 17].

Net Worth

The difference between your assets (what you own) and liabilities (what you owe)[cite: 17].

Trade-Off

Giving up one option in exchange for another that you think is more desirable[cite: 20].

Opportunity Cost

The value of your next best option—what you are giving up[cite: 20].

Budget

A spending and saving plan based on expected income and expenses[cite: 23].

Variable Expenses

Expenses that can go up or down each month[cite: 27].

Fixed Expenses

Expenses that do not change each month (ex. rent, car loan)[cite: 27].

Variances

The difference between planned income or spending and actual income or spending[cite: 29].

Favorable Variances

Spending less money than planned (or earning more)[cite: 29].

Unfavorable Variances

Spending more money than planned (or earning less)[cite: 29].

Manual Records

Consist of information recorded in hard-copy format using pen and paper.

Electronic Records

Financial information stored on a computer that can be updated, stored, and retrieved with ease.