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Simple Interest
interest paid on the principal alone
Compound Interest
interest earned on both the principal amount and any interest already earned
SMART Goal Setting
Specific
Measurable
Attainable
Relevant
Time-bound
Gross Pay
the total amount of an employee's earnings before deductions are taken out
Net Pay
Amount of income left after taxes and deductions have been taken out.
FICA
Federal Insurance Contributions Act; tax levied on employers and employees to support Social Security and Medicare
Opportunity Cost
whatever must be given up to obtain some item
Trade Off
Giving up one thing for another
Fixed Cost
Costs that do not vary with the quantity of output produced (internet fee)
Variable Cost
a cost that rises or falls depending on how much is produced (groceries)
Period Cost
known but occasional payments (school fees)
PYF
pay yourself first
surplus
more income than expenses
Deficit
more expenses than income
Cash Flow Statement
A summary that shows total income and spending for a given time period
monthly budget
Your guide to income and
spending for the month.
personal net worth statement
shows a person's net worth based on assets and liabilities
asset
something of value
Liabilities
debts that you owe
Debt Ratio
total liabilities/total assets
debt-to-income ratio
The amount of debt a person or a household has in relation to his or her income. ( lenders prefer a ratio 28-36% )
Current Ratio
liquid assets/current liabilities
Liquidity
how fast an asset can be converted into cash
Current Liabilities
liabilities due within a short time, usually within a year
long-term liabilities
liabilities owed for more than a year, usually loans/mortgages
Rule of 72
The number of years it takes for a certain amount to double in value is equal to 72 divided by its annual rate of interest.
Inflation
A general and progressive increase in prices
Time Value of Money
the increase of an amount of money due to earned interest or dividends
Future Value
the amount of money in the future that an amount of money today will yield, given prevailing interest rates
Future Value of a series of deposits
Future value can be computed for a single amount or for a series of deposits called an annuity
present value of a single amount
The amount at a present time that is equivalent to a payment or an investment at a future time
Present Value of a series of deposits
amount of money a person needs to deposit so he can take a certain amount out of the account for a desired number of years
Pension
employer promises to set aside a certain amount for your retirement
Profit Sharing
Employer contributions depending on company profits
401k Plans
you contribute and your employer matches contribution
Vesting
your right to at least a portion of the benefits
TSA
Tax-sheltered annuity
Traditional IRA
not taxed now, taxed when you retire
Roth IRA
taxed now, not when you retire
401(k) Rollovers
when you direct the transfer of the money in your 401(k) plan to a new 401(k) plan or IRA
Deductions
Social Security - FICA
Medicare
401K
Health Insurance
Note 
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