Untitled Flashcards Set

Decision Making

The process of choosing between alternatives or options.

Goals

The end result of something a person intends to acquire, achieve, do, reach, or accomplish.

Financial Well-Being

The state of having a healthy financial life, where a person's income, expenses, and savings contribute to overall happiness.

Accountability

The obligation of an individual to account for their activities, accept responsibility, and disclose results transparently.

Kakeibo

A Japanese art of saving money that encourages mindfulness in financial decision-making.

Emergency Fund (EF)

Savings that cover 3-6 months of living expenses for unexpected financial emergencies.

SMART Goals

Goals that are Specific, Measurable, Attainable, Realistic, and Time-bound.

Defined Contribution Plan

An employer-sponsored retirement plan where the contribution amount is defined, like a 401(k).

Social Security

A government entitlement program that provides income for retirees, funded by payroll taxes.

401(k) Plan

A retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out.

Dollar-Cost Averaging

An investment strategy where a fixed dollar amount is invested at regular intervals, regardless of the asset's price.

IRAs

Individual Retirement Accounts that allow individuals to save for retirement with tax advantages.

Traditional IRA

A retirement account that allows individuals to save pre-tax dollars which grow tax-deferred.

Roth IRA

A retirement account that allows individuals to invest after-tax income, which grows tax-free.

Income Statement

A financial statement showing a company's revenues and expenses over a specific period.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific date.

Federal Reserve (the Fed)

The central bank of the United States, responsible for monetary policy and regulating the banking system.

Monetary Policy

The process by which the central bank manages money supply to influence the economy.

Inflation

The rate at which the general level of prices for goods and services is rising.

Investing

Allocating resources, typically money, with the expectation of generating income or profit.

Risk Tolerance

An individual's ability and willingness to withstand fluctuations in the value of investments.

Dividend

A portion of a company's earnings distributed to shareholders.

Compounding Interest

Interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Net Interest Margin

The difference between the interest income generated and the amount of interest paid out to lenders.

Credit Score

A numerical expression that represents a consumer's creditworthiness.

Credit Report

A detailed report of an individual's credit history prepared by a credit bureau.

Soft Credit Check

A credit check that does not affect your credit score, often used for pre-screenings.

Hard Credit Check

A credit check that can affect your credit score and reports on your credit history.

Taxpayer

A person or entity that is obligated to pay taxes to a government.

Income Tax

A tax that governments impose on income generated by businesses and individuals.

Payroll Tax

A tax on earned income to fund Social Security and Medicare.

Property Tax

A tax based on property ownership, such as real estate, assessed by local governments.

Sales Tax

A tax imposed on sales of goods and services, collected at the point of sale.

Capital Gains Tax

Tax on the profit from the sale of an asset, such as stocks or real estate.

Annual Percentage Rate (APR)

The yearly interest rate charged on borrowed money, expressed as a percentage.

Revolving Credit

A type of credit that allows the borrower to withdraw, repay, and withdraw again.

Installment Credit

A type of credit that requires borrowers to pay back the loan in specific installments over time.

Liquidity

The ease with which an asset can be converted into cash without affecting its market price.

Asset Allocation

The process of deciding how to distribute an investment portfolio among different asset categories.

Volatility

A statistical measure of the dispersion of returns for a given security or market index.

Diversification

The practice of spreading investments among various financial instruments to reduce risk.

ETF (Exchange-Traded Fund)

A type of investment fund and exchange-traded product that holds assets like stocks, commodities, or bonds.

Primary Market

The market where securities are created and sold for the first time, like during an IPO.

Secondary Market

The market where previously issued securities are bought and sold among investors.

Time Value of Money

The concept that money available now is worth more than the same amount in the future due to its potential earning capacity.

Speculative Investment

Investments that carry high levels of risk and are usually characterized by high fees and volatility.

Pay Yourself First

A savings strategy where individuals set aside a portion of their income for savings before spending on expenses.

FICO Score

A credit score created by the Fair Isaac Corporation, used by lenders to assess creditworthiness.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its stock price.

Earnings Per Share (EPS)

The portion of a company's profit allocated to each outstanding share of common stock.

Price Earnings Ratio (PE Ratio)

A ratio used to value a company by comparing its current share price to its per-share earnings.

Alpha

A measure of an investment's performance relative to a market index.

Beta

A measure of a stock's volatility in relation to the overall market.

Cash Flow

The total amount of money being transferred into and out of a business.

Financial Statements

Formal records of the financial activities and position of a business, person, or entity.

Black Monday

An event in October 1987 characterized by a major stock market crash.

Wall Street

A street in New York City that is the financial district of the United States, home to the New York Stock Exchange.

S&P 500

A stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the U.S.

Dow Jones Industrial Average

An index that indicates the value of 30 significant publicly traded companies in the U.S.

Blue Chip Stocks

Shares in large, reputable companies known for their reliability and ability to generate profit.

Mutual Funds

Investment programs funded by shareholders that trade in diversified holdings and are professionally managed.

Outstanding checks

Checks that have been written and recorded in a company's or individual's check register but have not yet cleared the bank, meaning the funds have not been withdrawn from the account.

Open Ended Credit

A type of credit that doesn't have a fixed limit or end date. Borrowers can use and repay as needed without a set contract on the amount.

The finance charge on a loan or credit card is calculated using the

APR

Personal Property Inventory

The finance charge on a loan or credit card is calculated using the

Income Statement

A financial statement showing a company's revenues and expenses over a specific period.

Exemption

a provision that allows individuals or entities to exclude certain amounts from taxable income, reducing their overall tax liability.

W-4

Completed by new employees to direct the employer on the quantity of taxes to be removed from each paycheck.

1040EZ

A simplified tax form used by individuals to file their federal income tax returns, designed for those with basic tax situations.

W-2

A tax form that reports an employee's annual wages and the amount of taxes withheld from their paycheck, provided by employers.

1040

A standard IRS form that individuals use to file their annual income tax returns.

Loss Leader

a good that a store is wiling to sell for no profit inn order to drive consumer traffic

FTC

Rule requires used automobile dealers to fully disclose to buyers what is and is not covered under warranty for the used vehicle

Risk Shifting

occurs when an individual buys insurance to cover financial losses caused by fire, theft, injury, or death.

indemnification

occurs when the policyholder who has suffered an insurable loss is put back int he same financial condition before the loss occurred

Fair debt collection practices act

prohibits the use of threats, obscenities, and misleading statements to intimidate consumer into paying.

Line of credit

can solve a sudden need for cash with a pre-established amount that can be
borrowed on demand with no collateral.