personal finance final

Personal Finance

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

Paycheck to Paycheck

Describes a person or household with little to no savings, where monthly income is devoted to expenses.

Credit

The granting of a loan and creation of debt, involving deferred payment.

Net Worth

The difference between a person's assets and liabilities.

Asset

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

Liability

Financial debts or obligations.

Budget

A written plan for giving, saving, and spending.

Fixed Expense

Expense that remains constant monthly.

Variable Expense

Expense that fluctuates monthly but is expected.

Intermittent Expense

Expense occurring at various times throughout the year in large sums.

Discretionary (Nonessential) Expense

Expense for non-essential items.

Net Income

Earnings after deductions, also known as take-home pay.

Gross Income

Earnings before taxes and deductions.

Emergency Fund

Savings for financial emergencies.

Interest Rate

Percentage charged for the use of borrowed money.

Rate of Return

Investment profit or loss expressed as a percentage.

Time Value of Money

Money's worth more today than in the future due to earning potential.

Collateral

Owned item offered as security on a debt.

Installment Credit

Fixed loan amount repaid in monthly installments.

Revolving Credit

Credit that renews with each payment reducing debt.

Principal

Original loan amount before interest.

Prefrontal Cortex

Brain part controlling memory, impulses, and thoughts.

Amygdala

Brain part regulating stress responses.

Impulse Buying

Purchasing without prior planning.

Buyer’s Remorse

Feeling of guilt or regret after a purchase.

Sweet Spot

Intersection of passion and skill.

Proximity Principle

Connecting with relevant people and places for opportunities.

Private Student Loans

Loans from banks or organizations with lender-set terms.

Federal Student Loans

Government loans with terms set by law.

Forbearance

Temporary halt on debt payments with accruing interest.

FAFSA

Federal application for financial aid.

Gift Aid

Financial aid not requiring repayment.

Grant

Financial aid usually not repaid, often based on financial need.

Work-Study

Program allowing students to work part-time while studying.

Insurance

Arrangement for financial protection or reimbursement of losses.

Policy

Contract between an insurer and the insured.

Coverage

Liability protection amount in an insurance policy.

Premium

Money paid for an insurance policy.

Deductible

Out-of-pocket amount before insurance payment.

Claim

Formal request for compensation from an insurance company.

Renters Insurance

Protection for personal property for renters.

Health Insurance

Coverage for medical expenses from illness or injury.

Investing

Setting money aside to increase wealth for long-term goals.

Stock Market

Market trading shares of public companies.

Stock

Security representing ownership in a company.

Individual Retirement Arrangement (IRA)

Tax-advantaged retirement savings account.

401(k)

Company-offered retirement savings plan for employees.

Diversification

Spreading investments to lower risk.

Dividend

Distribution of company profits to shareholders.