12th Grade Economics/Personal Finance Review Flashcards

Vocabulary flashcards covering key financial concepts from a 12th-grade economics/personal finance review sheet.

Saving

Setting aside money for short-term goals with low risk.

Investing

Allocating money for long-term growth with a higher degree of risk.

Inflation

A sustained increase in the general price level of goods and services, decreasing purchasing power.

Emergency Fund

A financial safety net for unexpected expenses, ideally covering 3-6 months of living expenses.

Budget

An estimate of income and expenses over a specific period.

Needs

Essential expenses necessary for survival (e.g., rent, food).

Wants

Non-essential expenses that enhance the standard of living (e.g., dining out, shopping).

Credit Score

A numerical representation of creditworthiness based on credit history.

Cognitive Bias

A systematic pattern of deviation from norm or rationality in judgement.

Loss Aversion

The tendency to prefer avoiding losses to acquiring equivalent gains.

Confirmation Bias

The tendency to search for, interpret, favor, and recall information that confirms one's beliefs.

Anchoring

The tendency to rely too heavily on one piece of information when making decisions.

Checking Account

An account designed for daily transactions and easy access to funds.

Savings Account

An account designed for storing money and earning interest over time.

Certificate of Deposit (CD)

A savings account with a fixed term and a fixed interest rate.

Money Market Account

A savings account that typically offers higher interest rates than regular savings accounts.

Diversification

Spreading investments across different industries, markets, or assets to reduce risk.

High-Risk Investment

An investment with a higher potential return, but a greater chance of losing value.

Low-Risk Investment

An investment with a lower potential return and less probability of losing value.

Bonds

Debt securities where a borrower repays a certain amount plus interest to a lender after a specific period.

Stock Market

A trading network that connects investors looking to buy and sell stocks.

Financial Goals

Objectives set to achieve financial security and success, categorized as short-term, medium-term and long-term.

Retirement Savings

Saving portion of your income over time to fund your future once employment ends.

FDIC Insurance

Federal Deposit Insurance Corporation; protects depositors against the loss of money in case a bank fails.

Life Insurance

Financial protection for beneficiaries after the policyholder’s death.