Personal Financial Literacy Vocab

Revolving Credit

An open-ended account with a limit to how much can be borrowed but no time limit for repayment.

Diversification

Distributing funds among different types of investments to minimize overall risk.

Net Income

Also called, “Take home pay” it's the amount of income left after payroll deductions.

Credit Report

A written record collected by a credit agency that tracks a borrower's credit payments, whether or not the payments are made are made on a timely basis and how long the borrower has had various credit accounts.

Insurance Premium

The payment a person makes to an insurance company in exchange for its promise of protection and help.

Savings Account

An account you have at a financial institution that helps you accumulate and save money and earn interest at the same time.

Checking Account

A bank or credit union account that allows withdrawals by writing a check or using a debit card associated with the account.

Credit

Amount of money a creditor is willing to loan another to purchase goods and services, based on trust and the expectation that the money will be repaid as promised with interest.

Taxes

A compulsory payment by individuals or organizations to the government; fees placed on income, property or goods to support government programs.

Mutual Fund

An investment security that is actually a diversified portfolio of equities, bonds or other securities. Investors purchase shares and can sell them at any time.

Investment

Setting aside money for future income, benefit, or profit to meet a long-term goal; using savings to earn a financial return.

Bankruptcy

Legal process for selling most of the debtor's property to help satisfy debts that cannot be repaid, in exchange for relieving debtors of the responsibility of paying their financial obligations or protecting them while a plan is created and they try to repay debts.

Yield

The profit from an investment.

Pay Yourself First

Disciplined saving or setting aside money as a regular part of the budget for later spending or investing.

Capital

The value of personal items that one owns, including savings, investments and property.

Credit Card

Card that enables holder to charge expenses for purchases or to get money, often with interest.

Annual Fee

The amount that credit card companies charge for the use of a credit card.

Fixed Expenses

Expenses that cost the same amount of money every time.

Credit Union

A financial institution owned by its members that provides savings and checking accounts and other services to its membership at low fees

Withholding

Employers deductions for employees’ earning to pay employees’ taxes

Budget

A plan for managing money, dividing up expected income and expenses among spending and saving options based on personal goals during a given time period.

Annual Percentage Rate (APR)

The finance charge or total amount it cost per year to use credit, calculated as a percentage of the amount borrowed, including interest, transaction fees, and service charge.

Deductible

The amount of loss you must pay out of your own pocket before the insurance company will step in and pay the rest.

Debit Card

A card used to pay for goods and services directly from a checking account by transferring funds electronically from one’s checking account to the store’s account to pay for a purchase.

Liquidity

The ease with which an asset can be converted to cash without serious loss.

Variable Expenses

Expenses that are not fixed.

Assets

What a person owns, such as cash, stocks, bonds, real estate, and personal possessions.

Dividend

The portion of the profits paid to the shareholders of a company.

Gross Income

The total amount of income from wages before any payroll deductibles.

Return

Earnings from an investment, usually expressed as an annual percentage rate.

Appreciation

A rise in value or price.

Employee Benefits

Additional benefits, beyond a paycheck, offered by employers (e.g. health insurance, retirement plan).

Credit Rating/Score

A measure of credit worthy news based on an analysis of the consumer’s financial history, often computed as a numerical score, using the FICO or other scoring systems to to analyze the consumer’s credit.

Identity Theft

When someone uses your name, social security number, credit card number and/or other personal information without your permission.

Principle

The amount of money someone is willing to loan you. Also, the amount of money that is still owned on a loan.

Spending

Using income for current comsumption.

Finance Charges

The interest paid on unpaid credit balances.

Savings

Money set aside for short-term goals.

Debt

The entire amount of money owned to lenders.