Personal Finance Important Terms Unit 3:

Future Value

An amount of money multiplied by the interest rate and the ammount of time that the money will be earning interest.

Income risk

While individuals make goals and strategies based on their current income, few individuals have guarantees that their income will stay the same.

Inflation risk

Prices on an item or service may rise or fall.

Interest rate risk

When we borrow money in the form of a loan or save money, interest rates will affect these activities.

Personal financial planning

The process of creating and achieving financial goals.

Shared decision-making

Involves having two or more people negotiate or compromise to make financial decisions.

Time value of money

Refers to the increases in an amount of money because of the interest earned on the money.