Ramsey Classroom – Chapter Review: Key Terms (Personal Finance)

Vocabulary flashcards covering key terms from the Chapter Review on personal finance.

Personal Finance

The management of an individual's money, including budgeting, saving, investing, and planning for future needs.

Consumer Debt

Debt incurred by purchasing goods or services for personal use.

Paycheck to Paycheck

Living from one paycheck to the next with little or no savings.

Credit

The ability to borrow money or obtain goods/services with a promise to pay later; often involves a lender.

Interest Rate

The percentage of borrowed money charged by lenders for the use of funds; expressed as a rate.

Loan Shark

A person who lends money at extremely high or illegal rates, often using threats or coercion.

Interest

The cost of borrowing money; the fee charged by a lender for the use of funds.

Financial Plan

A structured plan that outlines how you will manage money to reach your financial goals.

Net Worth

Assets minus Liabilities; the net value of what you own.

Asset

Something of value you own that can add to your wealth (e.g., cash, property).

Liability

A financial obligation or debt you owe to others.

Positive Net Worth

Assets exceed liabilities; overall financial health is good.

Negative Net Worth

Liabilities exceed assets; indicates debt greater than value.

Net Income

Income remaining after expenses are subtracted; also called profit.

Expense

Money spent on goods, services, or obligations.

Financial Literacy

Having the knowledge and skills to manage your money effectively.

Five Foundations

A sequence of basic money-management steps designed to build wealth and improve financial health.

Emergency Fund

A savings cushion set aside to cover unexpected expenses.