Financial Literacy and Education

These flashcards cover key concepts related to financial literacy and education from the lecture notes.

Financial Literacy

The ability to understand and effectively apply financial skills such as budgeting, saving, and investing.

Budgeting

The process of creating a plan to allocate income towards expenses, savings, and investment.

50/30/20 Rule

A budgeting guideline that suggests allocating 50% of income to needs, 30% to wants, and 20% to savings.

Emergency Fund

Savings set aside to cover unexpected expenses or financial emergencies.

Digital Banking

The use of internet-based platforms to perform financial transactions and manage banking services.

Compound Interest

Interest calculated on the initial principal and also on the accumulated interest from previous periods.

Simple Interest

Interest calculated only on the principal amount, not on accumulated interest.

Debt-to-Income Ratio

A measure used by lenders to calculate an individual's ability to manage monthly payments and repay debts.

Investment Portfolio

A collection of financial assets such as stocks, bonds, and other investments owned by an individual or institution.

Mutual Funds

Investment vehicles that pool money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities.

Exchange-Traded Funds (ETFs)

Investment funds traded on stock exchanges, similar to stocks, that typically track an index.

Capital Appreciation

An increase in the value of an asset or investment over time.

Interest Rates

The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal.

Risk Tolerance

An investor's ability and willingness to endure market volatility and potential losses in their investments.

Fraud Prevention

Measures taken to protect against financial fraud, including identity theft and unauthorized transactions.

Savings Strategies

Approaches to effectively accumulate funds, such as automated savings, budgeting, and cutting unnecessary expenses.