Money Management, Income Taxes, and Monetary Asset Management

Vocabulary flashcards covering personal money management strategies, tax preparation steps and types, and monetary asset management tools.

Money Management

The process of budgeting, saving, investing, spending, and overseeing capital usage; also known as investment management and portfolio management.

Budgeting

A money management process that manages financial obligations and future reserves.

Savings

Surplus funds placed in interest-bearing accounts.

Cash Flow

The timing of cash received and payments made.

Emergency Cash Reserve

A dedicated fund set aside for unexpected needs, ideally equal to $3\text{--}6$ months of monthly expenses, or $12$ months if job security is low.

Net Worth Statement

A financial statement that tracks financial progress by calculating total assets minus total liabilities ($\text{Net Worth} = \text{Assets} - \text{Liabilities}$).

Spending and Saving Planner

A $12$-month financial plan that outlines how money will be divided based on future goals and past spending records.

Debt Payments to Take-Home Income Ratio

The ratio of non-mortgage debt payments divided by take-home income; a value above $0.2$ ($20\%$) signifies a higher risk of financial problems.

Income Taxes

Taxes levied on financial income generated within a government's jurisdiction, applicable to both individuals and business entities, used to fund healthcare, education, and infrastructure.

Corporate Tax

The specific term used for income taxes imposed on business entities and corporations.

Progressive Tax

A tax structure where the tax rate increases as income, profits, or spending increases, resulting in higher-income earners paying a higher percentage of their income in taxes.

Income Statement

An accounting document prepared for a business entity that details its income and expenses over a tax period.

Balance Sheet

An accounting record of a business entity that summarizes its assets, liabilities, and accumulated earnings.

Checking Account

A highly liquid deposit account, also referred to as a demand or transactional account, designed for frequent deposits and withdrawals via checks, ATMs, and electronic debits.

Commercial Account

A specialized checking account established specifically to process transactions for businesses.

Joint Account

A bank account shared and maintained by two or more individuals.

Monetary Asset Management

The practice of managing cash, checking and savings accounts, certificates of deposit (CDs), and money market accounts to maximize interest, minimize fees, and ensure money is kept safe and accessible.

Money Market Accounts

A monetary asset management tool primarily used to hold funds while potentially earning interest.

Savings Account

A low-risk account held at a bank or credit union intended for safely storing funds, executing withdrawals, and earning interest.

PDIC Insurance

Deposit insurance that protects eligible bank deposits within coverage limits if an insured bank fails.

Liquidity

The characteristic of an asset or account that enables fast and easy withdrawals and transfers of funds.

Online Savings Account

A savings account offered by online banks that typically features lower fees, higher earnings due to lower operating costs, and minimum initial deposits starting as low as $P100$.