Unit 3 Key Terms | Money Management P1 - Banking & Budgeting

Bank

A financial institution licensed as a receiver of deposits usually regulated by the national government of most countries.

Budget

A financial plan used to forecast and track income and expenses.

Certificate of Deposit (CD)

A savings certificate entitling the bearer to receive interest at a set time in the future called the maturity date, and at the specified fixed interest rate.

Compound Interest

Interest paid on interest previously earned (or paid!).

Credit Union

Member-owned financial institution in which account holder deposits are insured by the NCUA.

Debit Card

A bank card that automatically deducts the amount of a purchase from the checking account of the cardholder.

Delayed Gratification

The ability to put off something mildly fun or pleasurable now in order to wait for something that is more fun or rewarding later.

Depreciation

A decrease or loss in value.

Discretionary Expense

Money spent for a 'want' rather than a 'need' in your budget.

Emergency Fund

An account that is used to set aside funds for unplanned costs due to unexpected loss of a job or other major expense.

Expense

Money spent for goods and/or services.

Federal Deposit Insurance Corporation (FDIC)

A government entity that provides deposit insurance guaranteeing the safety of a depositor's accounts in member banks up to $250,000.

Financial Institutions

Businesses that provide banking services to consumers and businesses.

Fixed Expense

A cost of goods or services that is paid regularly (monthly).

Impulse Purchase

An item bought without previous planning or consideration of the long-term effect.

Interest

The cost of money that is borrowed or loaned, usually a percentage of the borrowed/loaned amount.

Interest Rate

The percentage paid to a lender for the use of borrowed money, usually represented as an annual rate.

Liquidity

Quality of an asset that permits it to be converted quickly into cash without loss of value.

Mobile Payments

Sending or receiving payment through apps such as Apple Pay or Google Wallet.

National Credit Union Administration (NCUA)

An independent federal agency that insures and supervises federal credit unions.

Opportunity Cost

Cost of the next best alternative use of money, time, or resources when one choice is made rather than another.

Overdraft

Occurs when money is withdrawn from a bank account and the available balance goes below zero.

Pay Yourself First (PYF)

A phrase that means automatically routing your specified savings contribution from each paycheck to prioritize savings.

Payday Lending

A type of short-term loan where an individual borrows a small amount at a high rate of interest.

Periodic/Intermittent Expense

Costs which occur on an irregular basis, rather than monthly.

Person to Person Payment (P2P)

Payments through services such as PayPal or Venmo.

Predatory Lending

Any lending practice that imposes unfair or abusive loan terms on a borrower.

Savings Account

A bank or credit union account in which you deposit money for future spending.

Scarcity

The basic economic problem that arises because people have unlimited wants but resources are limited.

Simple Interest

Interest paid or figured on the original amount of a loan or on the amount of an account.

Transaction Fee

An extra charge for various credit activities such as using an ATM.

Variable Expense

A cost of goods or services that changes in amount from week to week or month to month.

Zero-Based Budget

A spending plan that assigns an expense to every dollar of your income.

50/30/20 Budget

A spending plan that allocates 50% of your net income to needs, 30% to wants, and 20% to savings.