Home Ec Midterm Review

Budgeting

planning how to allocate income toward expenses, savings, and financial goals

Income

Money received from work, investments, or other sources

Expenses

Costs incurred for goods, services, or obligations

Liquid Assets

cash or assets that can be quickly converted to cash without losing value

Time Value of Money

the concept that money today is worth more than the same amount in the future due to earning potential

Paying Bills on Time

meeting financial obligations by their due date to avoid fees and protect credit

Interest

the cost of borrowing money or the earnings from lending/saving money

Compounded Interest

interest calculated on both the initial principal and accumulated interest

Annuity

a financial product that provides regular payments over time, often used for retirement

Tax Laws

government rules that determine how income and transactions are taxed

IRS

Internal Revenue Service- the U.S. agency responsible for collecting taxes

FICA

Federal Insurance Contributions Act- payroll tax funding Social Security and Medicare

1040, 1040A, 1040EZ

Types of U.S. individual income tax return forms

ATM Cards

Bank cards used to withdraw cash or access accounts at automated teller machines

Depository Institutions

Banks or credit unions that accept deposits and provide financial services

FDIC Insurance

Federal Deposit Insurance Corporation protection for bank deposits up to a set limit

Investments

Assets purchased with the expectation of generating income or appreciation

Checking Account Balances

the amount of money available in a checking account

Advantages of Using Credit

Convenience, ability to build credit history, and access to funds for emergencies

Disadvantages of Using Credit

Risk of debt, interest charges, and potential damage to credit score

Money Management

Organizing and controlling personal finances to meet goals

Overdraft Protection

a service that prevents declined transactions by covering overdrafts, often with fees

Savings Accounts

Bank accounts that earn interest and are used to store money securely

Credit Unions

Member-owned financial cooperatives offering banking services, often with lower fees

Credit

Borrowed money that must be repaid, usually with interest

FICO Credit Score

A numerical measure of creditworthiness used by lenders

Interest Rates on Credit Cards

the percentages charged on outstanding balances when borrowing via credit cards

Identity Theft

Fraudulent use of someone’s personal information for financial gain

Skimming

Stealing credit card data using a small device during legitimate transactions

Dumpster Diving

searching trash to find personal information for fraud

Shoulder Surfing

stealing information by watching someone enter data (like PINs or passwords)

Personal Loans

borrowed money from a bank or lender, repaid with interest

Amortization

the process of gradually paying off debt through scheduled payments

Selling a Home

the process of transferring property ownership in exchange for money

Buying a Home

purchasing property, often involving mortgages, inspections, and closing costs

Liquidity

how easily an asset can be converted into cash

Insurance, Taxes, Mortgage Payment

regular costs associated with owning a home

Healthcare Checkups

routine medical visits to maintain health and prevent illness

Life Insurance

provides financial support to beneficiaries after the policyholder’s death

Health Insurance

covers medical expenses for illness, injury, or preventive care

Homeowner’s Insurance

protects against losses or damages to a home and its contents

Auto Insurance

covers financial loss from car accidents, theft, or damage

Comprehensive

covers non-collision damage (theft, fire, natural disasters)

Collision

covers damage from car accidents

Medical Payments

pays medical expenses for driver and passengers

Bodily injury

Covers injuries caused to others in an accident

PIP (Personal Injury Protection)

covers medical expenses and wages regardless of fault

Florida Minimum

state-required minimum auto insurance coverage

No Fault

insurance system where each driver’s insurance pays their own expenses

Deductibles

the amount paid out-of-pocket before insurance coverage applies

PPO (Preferred Provider Organization)

flexible network, higher premiums, no referral needed

HMO (Health Maintenance Organization)

lower cost, requires referrals, limited network

Common Stock

ownership in a company with voting rights

Dividends

payments to shareholders from company profits

Risk-Return Relationship

higher risk investments usually offer higher potential returns

Diversification

spreading investments to reduce risk

NYSE (New York Stock Exchange)

Major U.S. stock exchange

Stock Quotes

current price and trading information of a stock

52 Week Low

lowest price of a stock in the past year

Ticker

abbreviation representing a stock on an exchange

Principal

original amount invested or loaned

Bond per Value

the face value of a bond

Bond’s Call Feature

allows issuer to repay bond before maturity

Mutual Funds

Investments pools managed by professionals

Expense Ratio

annual fee charged by mutual funds

Investment Portfolio

collection of investments owned by an individual

Asset Allocation

distribution of investments across asset classes

Social Security

federal program providing retirement, disability, and survivor benefits

401K

employer-sponsored retirement savings plan

403B

retirement plan for nonprofit and public employees

IRA Contributions

Money deposited into individual retirement accounts

Investment Limits

maximum annual contributions allowed by law