Introduction to Personal Finance

Vocabulary flashcards covering key terms and concepts from the Introduction to Personal Finance notes.

Personal Finance

All the financial decisions an individual or family must make in order to earn, budget, save, spend and give money over time.

Asset

Anything that is owned by an individual, including money in the bank or investments.

Consumer

A person or organization that uses a product or service.

Credit

The granting of a loan and the creation of debt; any form of deferred payment.

Debt

An obligation of repayment owed by one party (the debtor/borrower) to a second party (the creditor/lender); usually includes repayment of the loan amount plus interest.

Expense

The cost of goods or services; money paid out.

Financial Literacy

The knowledge and skillset necessary to be an informed consumer and manage finances effectively.

Financial Plan

A plan of action that allows a person to meet not only their immediate needs but also their long-term goals.

Interest

The additional cost a lender charges for borrowing money.

Interest Rate

The percentage of principal charged by the lender for use of its money.

Liability

Financial debts or obligations.

Loan Shark

A person or entity that charges borrowers’ interest rates above the established legal rate.

Net Income

What a person earns after payroll taxes and other deductions are taken out (i.e., take-home pay).

Net Worth

The difference between the value of a person’s assets and the value of their liabilities.

Negative Net Worth

When a person's liabilities exceed the value of their assets.

Positive Net Worth

When the value of a person’s assets exceeds the value of their liabilities.

Paycheck to Paycheck

A situation where monthly income is devoted to expenses with little to no savings.