Chapter 1: Introduction to Personal Finance

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Finance

Last updated 10:21 PM on 9/26/22
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17 Terms

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Personal Finance
All the financial decisions an individual or family must make in order to earn budget, save spend, and give money over time
All the financial decisions an individual or family must make in order to earn budget, save spend, and give money over time
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Consumer
A person or organization that uses a product or service
A person or organization that uses a product or service
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Debt
Money owed to another person or company
Money owed to another person or company
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Paycheck to Paycheck
An expressions used to describe a person or household whose monthly income is devoted to expenses and has little to no savings
An expressions used to describe a person or household whose monthly income is devoted to expenses and has little to no savings
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Credit
The granting of a loan and the creation of debt; any form of deferred payment
The granting of a loan and the creation of debt; any form of deferred payment
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Interest Rate
The percentage of principal charged by the lender for use of its money
The percentage of principal charged by the lender for use of its money
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Loan Shark
Person or entity that charges borrowers interest rates above an established legal rate
Person or entity that charges borrowers interest rates above an established legal rate
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Interest
The additional cost a lender charges for borrowing their money
The additional cost a lender charges for borrowing their money
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Financial Plan
A plan of action that allows a person to meet not only their immediate needs but also theri long term goals
A plan of action that allows a person to meet not only their immediate needs but also theri long term goals
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Net Worth
The amount by which the value of a persons assets exceed or falls behind the value of their liabilities
The amount by which the value of a persons assets exceed or falls behind the value of their liabilities
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Asset
Anything that is owned by an individual, including money in the bank or investments
Anything that is owned by an individual, including money in the bank or investments
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Liabilities
Financial debts or obligations
Financial debts or obligations
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Positive Net Worth
The dollar value of a person's assets is greater than the dollar value of their liabilities
The dollar value of a person's assets is greater than the dollar value of their liabilities
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Negative Net Worth
The dollar value of a persons liabilities is larger than the value of their assets
The dollar value of a persons liabilities is larger than the value of their assets
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Net Income
What person earns after payroll taxes and other deductions are taken out;often referred to as take-home pay
What person earns after payroll taxes and other deductions are taken out;often referred to as take-home pay
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Expenses
The cost of goods or services; money paid out
The cost of goods or services; money paid out
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Financial Literacy
The knowledge and skill are necessary for people to be informed consumers and manage their finances effectively
The knowledge and skill are necessary for people to be informed consumers and manage their finances effectively