Financial Decision-Making

Financial well-being

Being able to securely meet your current and future financial obligations

Net worth

The value of wealth a person or business owns minus the amount owed

Budget

A plan estimating income and expenses for a set period

Financial plan

A document that provides a picture of someone’s finances and goals and strategies for achieving those goals

Budget

A plan estimating income and expenses for a set period

Cash flow

The net money coming in minus the money going out of a business or household in a period of time

50-30-20 rule

A money management guideline for allocating certain percentages of income to needs, wants, and goals

Discretionary income

The amount of money that is left over for spending or saving from all income after accounting for taxes and necessities

Liquid assets

Something owned that can be converted to cash quickly at no loss

No liquid assets

An asset that cannot be converted easily to cash

Diversification

A method of managing investment risk by mixing the types of investments in order to provide the highest possible return for the lowest risk

Asset allocation

A strategy of balancing risk and return when making investments by determining which assets to invest in and how much money to invest in each type

Emergency funds

Funds available for use in emergency situations

Balance sheet

A financial statement that lists a person or company’s assets, liabilities and net worth

Equity

The value of ownership in something