econ final exam

financial literacy

The knowledge necessary for you to be able to know how to manage your finances as a consumer effectively

personal finance

The decisions you make so that you can not only earn, save, and budget your money but also spend and give it.

paycheck to paycheck

When someone devotes their monthly income to expenses and have little to no savings

Net income

The money you have earned, after taxes have been excluded

net worth

the amount of the value of things you own that may exceed or fall below the value of their liabilities

asset

things you own including money and investments

liabilities

debts and financial obligations

negative net worth

when the value of your assets is less than the value of their liabilities

positive net worth

when the value of your assets is greater than the value of their liabilities

saver

when you are a secure and structured person and tend to save more than you spend

spender

if you are more of an impulse buyer and tend to spend more than you save

debt

money that you owe to other people or companies

expense

how much certain goods and services cost

fixed expense

when you pay the same amount for a certain expense each month

variable expense

an expense you pay each month but the price depends on usage

intermittent expense

when you have a certain expense at different times throughout the year

discretionary expense

everything that I want

zero based budget

a budget plan that assigns all of the money you make to a certain category

income

money that you earn from work or receive as a gift

envelope system

each category gets an envelope and in each envelope there is a certain amount of money to spend on that category

budget

a plan on how you will save and spend your money

cash flow statement

a summary of all of the money you make and spend over a certain amount of time

mirror

the problem with anyone's money is the person in the...

emotional

self control is \_________ maturity

20% head knowledge and 80% behavior

personal finance \=

less

live on \____ than you make

8/10

how many Americans are living paycheck to paycheck

broke

normal is...

income and net worth

2 measures of wealth

own

your net worth is what you \____ minus what you owe

specific

measurable

time-sensitive

yours

written

When you set financial goals, they should be . . .

$500

teen emergency fund should \=

$1000

college emergency fund should \=

3-6 months of expenses

adult emergency fund should \=

saver and spender

what are the 2 money personalities?

manage you

When talking about personal finances, always remember that you will either manage your money or the lack of it will..

write it down

in order to get clarity on your money goals and have a powerful reminder to keep you on track, you need to...

80%

the percentage of Americans who are living paycheck to paycheck is almost

$1.5 trillion

the total student loan debt owed in the U.S. is currently...

$1000

almost half of all Americans report having less than \_____ in savings

action plan

The Five Foundations provide a simple \____________ to help you win with money.

plan

a budget is a \_____ for your money

freedom

your budget gives you \________ to spend

spending

money flows out through giving, saving, and \__________

income

your biggest wealth building tool is your

income

giving

saving

spending

4 components of a budget

giving

What is the first priority in a budget?

saving

What is the second priority in a budget?

spending

What is the third priority in a budget?

rent

streaming services

mortgage

examples of fixed expenses

electric bill

gas

water bill

groceries

examples of variable expenses

tuition, Christmas, birthdays

examples of intermittent expenses

vacation, shopping sprees, outings

examples of discretionary expenses

shelter

utilities

transportation

food

What are the four walls?

The four walls

what should you prioritize when you get to the spend category?

perfect

a budget is never going to be a \________ process

envelope

one of the best ways to track your expenses s the \________ system

cash

when you use \______ you end up spending less

3 months

give your budget \______ to start working

different

every month is going to be....

gives you freedom to spend

A budget doesn't tell you not to spend. A budget actually

food, gas, entertainment, and shopping

The envelope system is especially helpful for expenses like

giving, saving, and expenses

The three priorities in your budget after listing income, are....

break down income and spending

specific categories are important to consider when creating a budget so you can

commission

What is it called when you make money on the percentage of the total sales you make?

depreciation

What is not a type of discretionary expense

giving

When you're creating your monthly budget, what's the first priority under "Expenses"?

more grateful

If you approach money with a generous spirit, you'll be . . .

stick to a budget, make adjustments, and catch errors

What will tracking expenses help you do?

investing

The process of setting money aside to increase wealth over time for long-term financial goals such as retirement

risk return ratio

relationship of expected return (profit you expect to make) compared to the amount of risk (amount you stand to lose if the price goes down) taken with a given investment

liquid asset

an asset that can be easily bought or sold

stock market

a financial market that trades shares of ownership of public companies

single stocks

Investments in a single company that are extremely risky

bull market

when stock values rise by 20%

bear market

when stock values drop by 20%

money market account

savings account with check-writing privileges

low risk and low return

bonds

sold by companies and governments

moderate risk and return

mutual funds

made up of a pool of money from a group of investors to invest in stocks, bonds, money markets, and similar assets

moderate risk and low to high return

real estate

buy low sell high for a good return

portfolio

a list of your investments

Roth IRA

an after tax account, so you already paid taxes on the money you invested