unit 2 flashcards - finncial bussiness

Budget

A financial plan to balance spending and saving, managing money during a given period.

Credit score

A number determined by credit rating agencies that affects interest rates and credit eligibility for an individual.

Discretionary expenses

Expenses that may change from month to month, and which are optional with regard to how much or how little you choose to spend on them each month.

Down payment

A payment made up-front when purchasing or leasing an expensive item.

Emergency fund

Money set aside for unexpected, essential expenses.

Fixed expenses

Expenses that do not change monthly and are not optional.

Incidentals

Minor expenses for items that are not essential.

Rent

The monthly payment required by a lease or contract for items such as apartments or cars.

Security deposit

An amount of money which must be paid up-front as a protection for the landlord or rental company in case you cause damage to their property while you are using it. The security deposit is kept by the landlord or rental company until you return their property, and if all is well then you are refunded the security deposit.

Utilities

Services provided at a residence, like internet, gas, and water.

Consequences

The effect, result, or outcome of an earlier action.

Financial plan

The process of setting spending priorities and taking action toward goals.

Insurance

An agreement to protect against specific risks in exchange for regular payments.

Interest

A fee charged for borrowing money.

Long-term goal

A goal that takes more than one year to achieve, typically 3-5 years.

Misfortune

Something bad or unexpected that happens.

Reserve

An amount of money kept back for future use.

Risk

The probability that injury, damage, or loss will occur.

Short-term goal

A goal that can be achieved within a year.

Benefit

An advantage, privilege, right, or financial reimbursement, like a medical plan.

Cash

Paper bills or metal coins used for transactions.

Check

A printed or written promise to pay a specific amount of money. Checks usually include your signature, the name of a bank which will provide the money, and a bank account number that the money will come out of.

Credit

A loan of money from a financial institution that must be repaid with interest.

Credit bureau

An agency which collects and sells information about how people use their credit, including if they make payments on time and how much credit they have available to them.

Credit report

A document summarizing loans and credit cards, their limits, and payment history.

Debit card

A bank card that withdraws funds directly from a checking account for purchases.

Mortgage

A loan from a bank or credit union for buying a house.

Overspend

The act of spending more money than available.

Repay

To pay back something that was borrowed.

Annual percentage rate (APR)

How much interest you will pay each year as a fee for borrowing money

Credit score

A rating used by credit reporting companies to help lenders decide whether to extend credit to a borrower

Debit card

A bank card that looks like a credit card but it takes money directly from your checking account to pay for the entire purchase all at once

Debt

Something owed to another - an obligation to pay

Interest rate

A percentage, usually on an annual basis, that must be paid back in addition to the original amount borrowed

Minimum payment

The smallest amount of money you are allowed to pay in order for a loan payment to not be considered late or incomplete

Prepaid credit card

A card that will spend like a credit card, but that has already been paid for in advance, such as a $50 Visa gift card

Borrower

A person who asks to use something that they do not own, with the promise to give it back later

Consumer

A person who buys goods or services.

Credit history

A record of how you have repaid your credit obligations

Financial institutions

Organizations or businesses that provide services related to money

Lending institution

An organization or business that loans money to borrowers

Line of credit

An amount of money a borrower is able to use, as in the amount of credit available on a credit card

Collection Agency

A business that will collect money from people who are past-due on their bills

Consolidate debt

To take more than one debt and put them together into one account with one payment

Credit card

Plastic cards that allow users to make purchases using borrowed money

Credit repair company

A business that will help you improve your credit score

Loans

Money temporarily given to you in exchange for repayment with interest

Penalty

A fee for breaking the terms of an account or agreement

Compound interest

Interest that is paid on interest that you have already earned

Principal

The amount of money loaned to you to be repaid at a later date

Spending habits

The usual ways people spend their money

Unexpected expenses

Costs not planned for, such as accidents and emergencies