Intro to Personal Finance

Consumer

(el consumidor)

Person or organization that purchases a product or service

Credit

(el credito)

The use of someone else's money borrowed now with the agreement to pay it back later

Credit Card

(la tarjeta de credito)

Plastic card issued by a bank or financial company that allows the purchaser to buy goods and services now with the agreement to pay for it later

Debit Card

(la tarjeta de debito)

Deducts money from a checking account almost immediately to pay for purchases

Debt

(la deuda)

Obligation of repayment owed by one party (borrower) to a second party (lender)

Economy

(La economia)

System by which goods and services are produced and distributed

Short-term goal

(la meta / el objetivo a corto plazo)

Can take up to 2 years

Intermediate / Medium-term goal

(la meta / el objetivo a medio plazo)

Can take 2 to 5 years

Long-term goal

(la meta / el objetivo a largo plazo)

Can take 5+ years

Impulse Buying

(las compras impulsivas)

Purchasing something without planning for it

Interest

(el interes)

Fee paid by a borrower to the lender for the use of borrowed money; typically calculated as a percentage of the original loan amount

Loan

(el prestamo)

An amount of money given to the borrower for a set period of time; after the set time has passed, the money must be paid back plus interest

Personal Finance

(las finanzas personales)

All the decisions made daily on how to earn, budget, save, and spend money over time

Specific goal

(la meta especifica)

Clearly states what you want to achieve.

Example: "Join a gym to improve my health."

Measurable goal

(la meta / el objetivo mensurable)

Indicator for you to know when you achieved your goal.

Example: "I will get A's in all my classes for two straight semesters."

Attainable/Achievable goal

(la meta / el objetivo alcanzable)

Identifies ways your goal can be accomplished. Example: "I will get A's in all my classes for two straight semesters by studying more every day."

Realistic goal

(la meta / el objetivo realista)

Identifies how your goal can be accomplished within realistic time frames. Example: "I will get A's in all my classes by studying at least 1 extra hour before bed."

Timely goal

(la meta / el objetivo oportuno)

Goal set to be achieved by a certain time frame.

Example: " I will have all of my college applications complete by February 1, 2023."

Asset

(el bien / el activo)

Items of value: ex. cash, investments, baseball trading cards, jewelry

Liability

(la deuda / la obligacion)

Items that are owed to others: car note, credit card loan

Budget

(el presupuesto)

Spending plan that allocates income towards expenses, savings, and debt repayment; can be electronic, paper, using an app, etc.

Income

(los ingresos)

Money coming in to you (paycheck, allowance, gifts, etc.)

Expenses

(los gastos / los costos)

Money being paid out by you (can be fixed and variable)

Investments

(las inversiones)

The outlay of money usually for income or profit; can be stocks, bonds, mutual funds, real-estate, etc.

Personal Finance Formula

(el formulario de las finanzas personales)

20% head knowledge; 80% behavior

Essentials

(las necesidades)

Allow you to live daily life. Example: food, water, clothes, housing, medical care

Secondary Needs

(las necesidades secundarias)

Make life easier. Example: Internet, cell phone, transportation

Nice-to-Haves

(Los que le gustan tener)

Makes life more enjoyable but you don't need it to exist. Example: dining out, vacations, entertainment, brand names

Average American Debt: Credit Card

(el promedio de las deudas

$14,947

Average American Debt: Mortgage

$190,249

Average American Debt: Student Loan

$52,803

Average American Debt: Car Loan

$30,025

Money Stages: Survival

Living paycheck to paycheck (income goes to expenses with little money for savings).

70% of Americans are in this stage

Money Stages: Comfort

Paying bills with income and have a surplus monthly; slowly building wealth

Money Stages: Secure

Wealth generates income and assets - your money is working for you

How banks and other financial institutions profit off lending

?Como los bancos ganan el dinero?

By charging high fees and interest rates

Net Worth

(el patrimonio neto)

A person's assets minus their liabilities

Positive Net Worth

(el patrimonio neto positivo)

Assets > Liabilities

Negative Net Worth

(el patrimonio neto negativo)

Assets < Liabilities

Your money personality

Impacts how you save and spend money.

Loan Shark

A person or business that offers loans at extremely high interest rates

Paycheck-to-paycheck

An expression used to describe a person or household whose monthly income is devoted to expenses and has little to no savings