Financial literacy

Spending

refers to the act of using money to purchase goods and services. It is

essential to track your spending to understand where your money goes and to help

you make informed financial decisions.

Financial stability

the condition where an individual or household has enough

income to meet their financial obligations without excessive stress. It often

involves having a steady income, manageable debt levels, and savings for

emergencies.

Short term financial goals

an objective you aim to achieve within a year.

Examples include saving for a vacation, paying off a credit card, or building an

emergency fund

Long term financial goal

are objectives that take more than a year to achieve.

These could include saving for retirement, buying a home, or funding your child's

education.

Income

money received from various sources, such as jobs, investments, or

business activities. It can be classified as earned income (from work) or unearned

income (from investments

Budget

a financial plan that outlines expected income and expenses over a

specific period, usually a month. It helps you manage your money and ensure you

do not overspend.

Investing

putting your money into assets like stocks, bonds, or real estate

with the expectation of generating a return or profit over time. It is a way to grow

your wealth.

Expenses

any cost incurred in the process of purchasing goods or services

Personal budget

detailed plan that tracks your income and expenses, helping

you manage your finances effectively. It allows you to allocate funds to different

areas such as savings, necessities, and discretionary spending.

S.M.A.R.T goals

specific, measurable, achievable, relevant, and time-bound

objectives. This framework helps you set clear financial goals, making it easier to

track your progress

Unplanned income changes

changes refer to unexpected increases or decreases in your

income. Emergency funds are savings set aside to cover unexpected expenses or

income loss, providing a financial safety net.

Fixed expense

costs that remain constant each month, such as rent or

mortgage payments, insurance premiums, and loan payments. These expenses are

predictable and should be included in your budget.

Variable expense

fluctuate from month to month, such as groceries, utility bills,

and entertainment costs. It’s important to monitor these expenses as they can

impact your overall financial health.

Discretionary expense

non-essential costs that can be adjusted or eliminated if

necessary, such as dining out, subscriptions, or luxury items. Managing these

expenses can help you save money

Irregular expense

: income that does not occur regularly, such as freelance

work, bonuses, or commission payments. It is important to plan for irregular

income in your budget to manage fluctuations effectively.