Financial Decision Making

Financial Literacy

Understanding financial principles like budgeting, saving, investing, and debt management for informed money decisions.

Financial Decision-Making Process

Involves identifying goals, gathering information, analyzing options, making choices, implementing decisions, and reviewing regularly.

Income

Money received regularly from work, investments, or other sources.

Expenditure

Money spent on goods, services, and obligations.

Budgeting

Allocating resources effectively, planning for expenses, and ensuring financial goals are met.

Savings Accounts

Bank accounts earning interest on deposited funds.

Compound Interest

Interest calculated on the principal and accumulated interest.

Credit Scores

Numerical representations of creditworthiness.

Risk Management

Identifying and managing financial risks like market, inflation, and personal risks.

Online Banking

Provides convenient access to financial services through technology.

Earned Income

Money received from employment or self-employment.

Passive Income

Earnings derived from investments, rental properties, or other sources where active involvement is minimal.

Fixed Expenses

Regular, recurring costs such as rent, mortgage payments, and insurance premiums.

Variable Expenses

Costs that vary with usage or consumption, like utility bills and groceries.

Discretionary Expenses

Non-essential spending on items like entertainment and dining out

Loans

Borrowed sums of money that must be repaid with interest.

Mortgages

Long-term loans specifically for purchasing property.

Credit Cards

Short-term borrowing tools allowing purchases on credit.

Simple Interest

Calculated on the principal amount only.

Inflation Risk

The risk that inflation will erode purchasing power over time.

Personal Risk

Risks related to individual circumstances, such as job loss or health issues.

Market Risk

The potential for investment losses due to market fluctuations.