Microeconmics Chapter 2

Reconciliation

A way to balance your account records with your bank or credit union.

Paystub

A document showing your gross and net pay

Utilities

A term used to reference electric, water, gas and other services

Debit

Money removed from your account

Credit

Money lent to you

Transfer

When money is moved from one account to another.

Overdraft

Credit extended from a bank or credit union when a checking account is empty

Deposit

Turning your money over to a financial institution for safekeeping.

Loan

Money lent to someone else in exchange for future payment

Insurance

A product promising to protect you from a financial risk

Interest

The percentage cost of borrowing from someone else

Balance

An amount of money owed or available in an account

Claim

A request submitted by your insurance provider to help pay for covered expenses

down payment

An amount paid before a large purchase to reduce the loan amount and prove your intention and ability to make such a purchase.

DTI

Debt to income ratio, the amount of money you make each month versus how much debt you to have to pay. DTI is an important aspect of qualifying for credit

Deduction

Something that allows you to lower the amount of taxable you made in a year

Expense

Anything you spend money on, whether it's necessity or a luxury.

lease

A contract that lets you use someone else's property for a specified rate and length of a time

Liquidity

How easily accessible money is. A checking account is extremely liquid, a CD is not

Mortgage

A loan used to a buy a home, often with a term of 15-30

Net worth

The amount that you own in assets minus the amount of you own in liabilites

Policy

A document detailing the type and amount of coverage that your insurance offers

Principal

The total amount of unpaid money on a loan excluding any interest charges

Taxes

Contributions to state and federal governments to pay for things like public services and infrastructure.

traditional IRA

A self-funded retirement account that invests pre-tax dollars, meaning taxes have to be paid when funds are withdrawn at retirement.

Dependents

Someone you can claim (say hat you take care of) on your taxes other than your spouse. Most dependents are children or family members.

Withholdings

How much money is taken out of you paycheck to go toward taxes. If you choose to take out extra withholdings, you’re more likely to get a large refund at tax time rather than owe money.

Federal Income Tax Withholdings

A percentage of you paycheck, based on your income, is taken out for income taxes.

FICA Medicare Taxes

1.45% of your paycheck goes toward Medicare, which helps pay for medical costs for elderly or disabled people.

FICA Social Security Taxes

6.2% of your paycheck goes toward social security, which is money that supports retirees, their families, and others who can’t work.

Gross Pay

The money you earn before any deductions are taken out.

Health Insurance Premium

If you have employer provided health insurance, you’ll pay a set premium

Premium

A set amount of money you pay to your insurance company every month in exchange for coverage, regardless of if you use the insurance or not.

Copay

A set amount you pay for certain services, such as regular checkups and preventative care.

In Network Providers

A provider that you insurance company has negotiated a discount with.

Out of Network Providers

A provider that your insurance company hasn’t negotiated a discount with meaning that you will have to pay the full price

Co-insurance

A set percentage of the full cost one will pay for healthcare services after the deductible is met for the year.

Out of pocket max

The maximum amount of money you will have to pay on healthcare services each year. Premiums do not count toward your max.

Roth IRA

A self-funded retirement account that invests after-tax dollars, meaning taxes do not have to be paid when funds are withdrawn at retirement.

Annual Percentage Rate

The yearly interest rate that one pays for money borrowed with a credit card and not paid back within the grace period.

401k

An employer-sponsored retirement savings account where employees contribute part of their paycheck

Individual Retirement Account

A savings account with specific rules about when money can be withdrawn