Financial Literacy Concepts

A set of vocabulary flashcards covering key financial literacy concepts including budgeting, credit, loans, and scams.

Budget

A plan for managing income and expenses.

Emergency Fund

A source of cash in case of an unplanned expense, illness, or job loss.

Net Worth

Your total assets minus your total liabilities.

Fixed Expense

A cost that typically remains the same in price and frequency.

Variable Expenses

A cost that may vary or be unpredictable.

Asset

What you own.

Liabilities

What you owe.

Living Within Your Means

Spending and saving that is less than or equal to your income.

Creditor

The person or institution lending money to the borrower.

Debtor

The person or institution borrowing money.

Principal

The original amount borrowed.

Interest

The cost of borrowing money, calculated based on the principal.

Term

The length of the loan.

Down Payment

An initial lump sum paid to secure a loan for a purchase.

Co-signer

A person who agrees to be legally responsible for someone else's debt if the debtor fails to pay.

Collateral

A valuable asset pledged to a lender as security for a loan.

Credit Score

A number that estimates how likely you are to repay a loan or make payments on time.

Credit Report

A record of your credit history and current financial situation.

Amortization

The process of paying off a loan over time in fixed payments.

Unsecured Loan

A loan where no collateral is used to secure the loan.

Line of Credit

A loan that allows you to borrow money up to a pre-set limit.

Minimum Monthly Payment

The lowest amount a customer can pay on their credit card each month.

Grace Period

A set time after the due date during which payment may be made without penalty.

Billing Cycle

The number of days between statements or required payments.

Credit Utilization

The percentage of your total available credit that you are currently using.

Risk Pooling

Sharing financial risk among a group of people or entities.

Ponzi Scheme

A form of fraud that pays profits to earlier investors with funds from more recent investors.

Pyramid Scheme

A fraudulent system of making money based on recruiting an ever-increasing number of investors.

Phishing

The fraudulent practice of inducing individuals to reveal personal information.