DECA Personal Financial Literacy Vocab

Comparison shopping

judging the benefits of different products by comparing several factors before purchase

Purchasing power

the real goods and services that money can buy; determines the value of money.

Fixed expenses

Expenses that do not change from month to month, such as auto insurance (car payments) or rent.

Federal Income Tax, State Income Tax, FICA (Social Security and Medicare), Wage Garnishments.

Mandatory Paycheck Deductions

Federal Reserve System (Fed)

US central bank that sets monetary policy and regulates banking system

Securities and Exchange Commission (SEC)

an independent federal agency that oversees the exchange of securities to protect investors

Internal Revenue Service (IRS)

The branch of the U.S. Treasury Department in charge of collecting taxes

Consumer Financial Protection Bureau

Fairness and transparency in consumer financial products and services

Time value of money

the principle that a dollar received today is worth more than a dollar received in the future due to inflation.

Long-term debt

a liability that falls due beyond one year from the date of the financial statements

Opportunity cost

benefits lost when you give up one item in order to get another. Opportunity costs exist because of scarcity—the gap between unlimited wants and limited resources

Balanced budget

A budget in which revenue and spending are equal.
total expenses + savings = total income

Simple interest

interest paid on the principal alone
I=prt

APY

Annual Percentage Yield -
the actual annual rate at which interest is earned, including the effects of compounding

Compound interest

interest earned on both the principal amount and any interest already earned

FAFSA

Free Application for Federal Student Aid -
main application students use to apply for federal education grants and loans (financial aid)

Federal Deposit Insurance Corporation (FDIC)

the government agency that insures customer deposits if a bank fails up to 250K.

Paying yourself first

The concept of setting aside a portion of your income for savings before spending any of it

Your credit past is your credit future

credit bureaus maintain credit reports, which record borrowers' histories of repaying loans and credit. Negative information in credit reports will adversely affect your ability to borrow at a later point.

Certificate of deposit

a savings certificate that gains interest and has a set time before you can withdraw your money (if you do early, you are penalized)

personal check

a check drawn against funds deposited in your personal checking account

accounting fraud

occurs when a company or organization knowingly publishes incorrect information on its financial statements.

promissory note

a written contract with a promise to pay a supplier a specific sum of money at a definite time

ATM cards

Allows person to deposit and withdraw money from their account at an atm

overdraft protection

an automatic loan made to an account if the balance will not cover checks written

amortization

the reduction of a loan balance through payments made over a period of time

barter

Exchange goods without involving money.

direct deposit

An automatic deposit of a paycheck without having to take a physical check to the bank.

check cashing store

A business that cashes checks, giving the customer cash in exchange for a fee for the service.

debit card

a card used to withdraw or deduct money from your checking account

wealth

the total value of everything someone owns, minus the debts. Assets

pawnshop

a shop where loans are made with personal property as security

savings bank

a depository institution that accepts savings deposits and makes mostly home-purchase loans

stop-payment order

a request that a bank or other financial institution not cash a particular check

secured credit

credit that requires security (collateral) that secures payment of the loan

unsecured credit

credit that does not require any security (collateral) to protect the payment of the debt

grace period

period of time during which the balance may be paid in full to avoid finance charges

Truth-in-Lending Act

A federal law that requires all finance charges be disclosed on consumer credit arrangements.

phishing

Use of fake emails and web sites to trick users into revealing sensitive data.

Comprehensive car insurance

covers your car for reasons other than a collision, such as theft, fire, vandalism

Universal insurance

tax complementary-universal-everyone eligible regardless of employment status insurance

actual cash value

the payment you receive is based on the replacement cost of an item minus depreciation

replacement value

Cost to replace or replicate property at todays prices (almost always higher then acv)

insurance premium

payments made by customers to secure a policy written by an insurance company

insurance deductible

the amount of expenses that must be paid out of pocket before an insurer will pay any expenses.

life insurance

intended to provide an income to an employee's dependents if the employee dies. An employee purchases life insurance in order to guarantee that surviving dependents will have sufficient
income to maintain their standard of living. Some businesses offer life insurance as part of their benefit plan, but in most cases employees must obtain their own life-insurance policies.

US treasury bond

Bond issued by the treasure with a 10 year maturity date. Capital gains only taxed federally.

capital gains

profits made from the sale of capital assets such as stocks and bonds for more than what was paid for them.

equity capital

money raised by a business or investor in exchange for a share of ownership of the company

Building wealth

Making money and saving it

35% : Payment history
30%: Credit Utilization
15%: Length of Credit History
10%: Types of Credit in Use
10%: New Credit

What composes a credit report?

-FICO website
- Credit Reporting Bureaus
- Experian
- TransUnion
- Equifax

Where to get credit score?

When you are denied a line of credit, you get a free report by one of the major credit bureaus.

When do you get a free credit report?

No, if you don't borrow, then you won't have a credit score.

Are credit scores required?

FICO score

rating from 300 to 850 that credit granters can use in making a loan approval decision

competent parties

parties who are legally qualified to make a binding contractual agreement

consideration in a contract

When one party in a contract makes another offer to the other that is accepted.

W-2 Form

A form that outlines an individual's earnings, and tax deductions incurred.

Form 1040

The standard tax form used to file an individual federal tax return. Where you list itemized deductions.

Due date for W-2 Forms

Due by end of January, given by employer

Due date for taxes

Mid-April

Roth IRA

Account providing tax-free income growth; contributions are made with after-tax dollars.

IRA

Tax-deferred arrangement for individuals with earned income; individual retirement arrangement.. You are taxed when you withdraw in the end.

You can only withdraw from your IRA without 10% penalty after age 59.5.

Withdrawing from IRA

Escrow Agent

The neutral third party holding funds or something of value in trust for another or others.

Escrow

Money or securities held by a third party until conditions of a contract are met

Buy and hold

- Buy stocks and then hold them for the long run, regardless of what prices do in the short run.
- You get tax deferments as long as you're holding so you can make interest on money that would have been lost on capital gains.

Dollar cost averaging

Investing roughly equal amounts of money at regular intervals. If stock goes up, you automatically are buying less schares, if stock goes down, you are automatically buying more shares.

Growth Stocks

Stocks in corporations that reinvest their profits into the business so that it can grow.

Profit and loss over a period of time for a company.

What does an income statement show?

EDGAR

Stands for Electronic Data Gathering and Retrieval
Free, public database contains required information about companies by the SEC

ESOP

employee stock option plan: a method for employees to purchase stock in the business they work for

Net Change

Difference between closing price of previous day and current day.

Real Estate

A tangible asset that you can invest in where your money will grow over time in the for of property such as land, houses and office buildings.

401(k)

defined-contribution plan, Pre-tax Retirement account provided to employees by their employer. You can contribute more, but there are limitations on what you can invest in. Employer may do investment matching.

Term Insurance

Life insurance coverage for a specified period of time, less expensive than whole

Liability Insurance

Provides protection from claims arising from injuries or damage to other people or property

Homeowner's Insurance

Protects against most types of losses and liabilities related to home ownership, pays for damages to a person's home and property.

Estate Tax

A tax on the estate, or total value of the money and property, of a person who has died. Estates are tax exempt up to $5 million.

Power of Attorney Document

grants power to a representative of your choosing to legally act and make decisions on your behalf.

Short-term Goals

goals set for less than one year (usually less than 3-months)

How to Set Financial Goals

1) Identify your financial goals
2) Calculate your net worth
3) Identify your sources of income
4) Assess your resources
5) Save for goals

Commercial Banks

they're full-service banks that offer a variety of
credit services, including secured and unsecured loans, installment credit, and bank credit cards.

Thrifts

- they specialize in savings accounts and real estate financing

Routine Decision

Decisions that are made often and automatically. Don't require much thinking.

Merchandising

a set of promotional activities designed to obtain sales in the retail setting.

Market Research

The activity of gathering information about consumers' needs and preferences.

General Management

executive who has overall responsibility for managing both the revenue and cost elements of a company's income statement, known as profit & loss responsibility

Work Permit

Written statement that makes it legal for an underage student (U18) or foreigner to work for an employer.

Over-the-counter market

A network of dealers who buy and sell stocks that are not listed on an exchange

- Include your name, address, telephone number, and email address
- resume profile which includes a summary of your skills, experiences
- Education: academic record and transcript
- Prior Work Experience

What goes on a resume?

Secondary market

the market in which previously issued securities are traded among investors

co-pay

The flat fee (usually $25 - 50) that you pay every time you see a certain doctor

Health Maintenance Organization

an organization that provides comprehensive medical care to subscribers for a fixed fee

Quota

A limit placed on the quantities of a product that can be imported

Inflation targeting

the use of an inflation ceiling ("target") to signal the need for monetary policy adjustments to stabilize prices

Economic Want

Desires for items that can only be obtained by spending money

Transfer Payments

Cash or in-kind benefits given to individuals as outright grants from the government

Installment Credit

- A loan repaid with interest in equal amounts over a set period of time.
- After the user makes a down payment, they sign an agreement to pay monthly installments until
the total is paid.

Penalty

Most common action by Government when you miss income tax filing is...?