Wise Financial Literacy Vocab

Financial Goal

A specific plan for saving or spending money with a clear purpose and timeline.

SMART Goal

A financial goal that is Specific, Measurable, Achievable, Relevant, and Time-bound.

Time Value of Money

The idea that money today is worth more than the same amount in the future.

Interest

The cost of borrowing money or the money earned on savings.

Rule of 72

A method to estimate how long it takes money to double at a fixed interest rate (72 ÷ interest rate).

Budget

A plan for how to spend and save money over a period of time.

Budget Variance

The difference between planned spending and actual spending.

Income

Money earned from work, investments, or other sources.

Windfall Income

Unexpected money received, such as lottery winnings or gifts.

Taxable Income

Income that is subject to government taxes.

Non-Monetary Benefits (Fringe Benefits)

Benefits like health insurance, retirement plans, or dental coverage.

401(k)

An employer-sponsored retirement plan that may include employer matching contributions.

Roth IRA

A retirement account funded with after-tax dollars; withdrawals are tax-free in retirement.

Traditional IRA

A retirement account where contributions may be tax-deductible and taxed upon withdrawal.

Capital Gains

Profit made from selling an investment for more than its purchase price.

Long-Term Capital Gains

Investment profits on assets held longer than one year, taxed at a lower rate.

Stock Split

A corporate action that increases the number of shares while reducing the price per share.

Dividend

A payment made by a company to shareholders, usually from profits.

Reinvesting Dividends

Using dividend payments to buy more shares of the same stock.

Securities

Financial assets such as stocks, bonds, and mutual funds.

Stock Exchange

A marketplace where securities are bought and sold.

Margin Buying

Borrowing money from a brokerage to buy stocks.

50% Margin

The investor pays half the cost of an investment while borrowing the other half.

Life Insurance Cash Value

The savings portion of a whole life insurance policy that grows over time.

Death Benefit

The money paid to a beneficiary when the insured person dies.

Term Life Insurance

Life insurance that provides coverage for a set period and does not build cash value.

Whole Life Insurance

Permanent life insurance that builds cash value over time.

Liability Insurance

Insurance that protects against lawsuits or claims for injury or damage.

Personal Property Floater

Extra insurance coverage for valuable personal items like jewelry or electronics.

Excise Tax

A tax on specific goods like cigarettes or alcohol that increases their price.

T-Bill (Treasury Bill)

A short-term, low-risk investment backed by the U.S. government.