Economics and Personal Finance Vocabulary List (1)

Budget

A plan for managing income and expenses over a specified period, helping individuals track spending, prioritize expenses, and achieve financial goals.

Income

Money received by an individual or household from various sources, such as wages, salaries, investments, or government transfers.

Fixed Expenses

Recurring costs that must be paid regularly, such as rent or mortgage payments.

Flexible Spending

Non-essential expenses that can be adjusted based on financial goals.

Savings Account

A bank account that allows individuals to save money and earn interest, and access funds in case of emergencies.

Interest

The cost of borrowing money or earnings on savings, expressed as a percentage of the amount borrowed; can also refer to earnings on savings.

Credit Score

A numerical rating based on an individual's credit history, used to evaluate creditworthiness.

Debt Management

Strategies and techniques to effectively manage and repay debts, including budgeting, negotiating with creditors, and prioritizing payments.

Closed-End Credit

A type of loan with a fixed repayment schedule, like mortgages or car loans.

Open-End Credit

A type of credit that allows repeated borrowing up to a set limit, like credit cards.

Pawnbroker

A business that offers loans in exchange for collateral, typically personal property, which is held until the loan is repaid.

Subsidy

A government payment that supports a specific economic activity, such as production or consumption of certain goods.

Overdraft Protection

A banking service that covers transactions exceeding an account balance, often for a fee

Mutual Funds

Investments pooling money from many investors to purchase a diversified portfolio of stocks, bonds, or rental properties.

Investment Income

Earnings generated from investments such as dividends, interest, and capital gains from stocks, bonds, or rental properties.

Retirement Planning

The process of determining and creating a plan to achieve retirement income goals and creating a plan to achieve them, including saving in 401(k)s or other retirement accounts.

Debt

Money owed to others with agreed-upon repayment terms.

Certificate of Deposit (CD)

A savings product with a fixed interest rate and maturity date, offering higher interest rates in exchange for limited access to funds.

Emergency Fund

Savings set aside to cover unexpected expenses, recommended to be 3-6 months' income.

Net Income

Amount of money earned after taxes and deductions are subtracted from gross income.

Financial Aid

Funding provided to students to help pay for education, including grants, scholarships, and loans.

Credit Bureau

An organization that collects and maintains credit information for consumers and businesses, used to generate credit reports.

FAFSA (Free Application for Federal Student Aid)

A form used to apply for financial aid for higher education in the U.S.

Disposable Income

Income remaining after taxes and mandatory deductions, used for spending and saving.

Collateral

Property or assets pledged as security for a loan.

Philanthropy

Giving time, money, or resources to promote the well-being of others.

Credit Union

A member-owned financial cooperative providing banking services, often with lower fees and interest rates compared to traditional banks.

Liquidity

The ease of converting an asset into cash without significant loss in value.

Cost of Living

The amount of money needed to maintain a certain standard of living, accounting for essentials such as housing, food, and healthcare.

Peer-to-Peer (P2P) Lending

Platforms connecting individual investors directly with borrowers, offering an alternative to traditional financial institutions.

Online Lender

Financial institutions that provide loans exclusively over the internet, often with relaxed eligibility but higher interest rates.

Payday Loan

A short-term, high-interest loan requiring repayment on the next payday.

529 Account

A tax-advantaged savings plan for educational expenses.

Retirement Income

Income received during retirement from sources like Social Security or pensions or invesments.

Technical School

An educational institution offering specialized training in various fields like technology, business, or healthcare.

Trade School

Institutions providing hands-on training for specific skilled trades such as welding or automotive repair.

Debt Management

Strategies for effectively managing and repaying debts, including budgeting and prioritizing debt payments.