Personal Finance 1.1-2.3

Glossary Terms

Financial Values

Fundamental beliefs that shape and influence financial behaviors and decisions.

Personal Finance

The management of an individual's financial decisions, including budgeting, saving, spending, and planning for the future. 

Values

Fundamental beliefs that shape and influence behaviors and decisions. 

Avoider

Someone that tends to shy away from dealing with financial matters, either due to lack of interest, understanding, or fear of confronting their financial reality.

Balancer

Someone that takes a moderate approach to finances, carefully managing their spending, saving, and investing, to maintain financial health and achieve long-term goals.

Investor

Someone that focuses on using their money to make more money, often by allocating funds into stocks, bonds, real estate, or other investment types.

Money Personalities

The distinct patterns or tendencies in how individuals perceive, interact with, and manage their finances.

Saver

Someone who prioritizes accumulating money, often seeking security and stability through regular saving habits.

Spender

A person who enjoys using their money to purchase products and experiences without much hesitation, and with less concern for saving.

Money fulfills three essential functions, as:

1. A medium of exchange

2. A unit of measure

3. A store of value

Characteristics of money

Durability, Portability, Divisibility, Uniformity, Limited supply, Acceptability

Barter System

Where goods and services are exchanged directly for other goods and services without a medium of exchange, like money being used.

Currency

The official form of money in active circulation within a country, including both physical forms like paper bills and coins, as well as the digital or accounting representation of it within the banking system.

Medium of Exchange

An instrument that represents a standard and agreed upon value, used to purchase goods and services and to pay debts.

Money

A medium of exchange that facilitates the buying and selling of goods and services in an economy.

Store of Value

An asset that maintains its value over time without depreciating significantly.

Durability

Physical forms of currency must be durable enough to withstand physical wear and tear.

Portability

Money also needs to be easily transportable.

Divisibility

Money must be also divisible into smaller units to facilitate transactions of varying sizes.

Uniformity

Uniformity means that units of money are identical to each other in value and appearance.

Limited Supply

For money to maintain its value, its supply must be controlled.

Acceptability

Money must be widely accepted by individuals and businesses.

ACH (Automated Clearing House)

A network for processing electronic financial transactions in batches, enabling efficient and cost-effective direct deposits and payments. 

Blockchain

An unchangeable, decentralized, digital ledger distributed across a network of computers.

Bounced Check

A check that cannot be processed due to insufficient funds in the bank account it's drawn from (the payor’s), leading to its rejection by the bank and a return to the issuer (payor).

Cash

Physical forms of money, such as banknotes and coins, that serve as a medium for exchanging goods and services.

Check

A form of payment that is dated and signed by the payor, directing the payor's bank to pay a specific amount of money to the payee the check is written.

Checking Account

A deposit account that allows for easy and frequent cash deposits and withdrawals.

Credit Card

An electronic method of payment allowing the card owner to purchase goods and services on credit.

Cryptography

The study or use of techniques to scramble or hide data, and validate messages and digital signatures, in order to secure digital information.

Debit Card

An electronic method of payment where the funds are deducted directly from the card owner's bank account. 

Digital Wallet

A software-based system that securely stores users' payment information and passwords for numerous payment methods and websites

EFT (Electronic Funds Transfer)

An electronic transfer of money.

Financial Exchanges

Transactions where goods, services, or assets are traded between parties, usually involving money as a medium of exchange. 

Forgery

The act of creating, altering, or imitating objects, documents, or signatures, with the intent to deceive or defraud by passing off the forged item as genuine.

Payor

An individual or entity responsible for making a payment to another party

Payee

The individual or entity that receives a payment from another party.

Overdraft

Occurs when an account's balance goes below zero, due to transactions exceeding the available funds, resulting in a negative balance.

Wire Transfer

A method for sending funds directly and quickly between bank accounts, often used for immediate and large transactions.