Video - Personal Finance Vocabulary Review

A set of vocabulary-style flashcards covering key terms from the Personal Finance lecture notes to help you review for the exam.

Medium of exchange

Money is accepted in exchange for goods or services.

Store of value

Money can be saved for later use.

Unit of account

Money measures and compares the value of goods and services.

Durable

Money must last over time.

Portable

Money is easily carried.

Divisible

Money can be divided into smaller parts for purchases.

Stable value

Money’s value does not change quickly.

Scarce

Scarcity gives money its value.

Accepted

Money must be accepted in exchange for goods or services.

Credit

Receiving funds today to buy goods/services with a promise to pay later.

Principal

Amount originally borrowed."

Interest

Cost for borrowing money.

Installment debt

Loan paid back in equal payments over time.

Mortgage

Installment debt on real estate (houses, buildings, or property).

Regular charge account

30-day credit with a limit; must be paid in full to avoid interest.

Revolving charge account

Allows new purchases without paying the full balance; interest applies.

Installment charge account

Equal payments over time; ownership transferred at end.

Credit card

Allows buying now and paying later; widely accepted, may have favorable terms.

Debit card

Cashless purchases; electronic funds transfer; not a loan.

Fixed-rate mortgage

Interest rate stays the same for the life of the loan.

Adjustable-rate mortgage (ARM)

Interest rate can change over time; may have caps.

5/1 with 5/2/5 cap

Rate fixed for 5 years; can rise by 5 points in year 6, then 2 points per year; lifetime cap of 5.

Credit score

Numerical rating (300–850) showing repayment capacity and risk.

Chapter 7 bankruptcy

Assets are liquidated to pay debts; impact on credit report up to 10 years.

Chapter 13 bankruptcy

Debts are consolidated and repaid over 3–5 years; assets protected from liquidation.

Income

Money received regularly from work or investments.

Gross income

Total earnings before taxes.

Disposable income

Money left after taxes; used for necessities.

Discretionary income

Money leftover after expenses; can be saved or spent.

Wages

Fixed, regular pay from an employer; can vary with market rates.

Consumer behavior

Process by which buyers make decisions; influenced by psychology and sociology.

Culture

Values, beliefs, and tastes handed down; broad determinant of behavior.

Core values of U.S. culture

Work ethic, wealth, family, individualism, education, freedom, health, etc.

Subcultures

Groups within a culture with distinct behaviors by ethnicity, age, location, etc.

Social influences

Belonging to multiple groups; group norms influence buying decisions.

Asch phenomenon

People conform to majority views even when they disagree.

Social classes

Six classes; wealth affects purchasing; class aspirations influence buying.

Maslow’s hierarchy of needs

Five levels of needs; lower-level needs must be partially satisfied before higher ones influence behavior.

Consumer rights

Right to safety, to be informed, to choose, to be heard; redress later added.

Better Business Bureau

Organization that helps consumers with information and dispute resolution.

Consumer responsibilities

Report problems, keep records, stay calm, act ethically, and seek solutions.

Advertisement

Notice promoting a product or service; ads are widespread.

Decision making

Process of choosing what to buy; considers scarce resources and opportunity cost.

Gathering information

Obtaining product information; internet as a tool; accuracy matters.

Comparison shopping

Evaluating different stores/products; price is a major influence; consider warranties.

Commercial banks

Banks that control large sums of money and offer broad services.

Savings and loan associations

Accept deposits and make mortgage and other loans; often lower rates.

Savings banks

Lend for home mortgages, personal and auto loans.

Credit unions

Member-owned; offer savings and low-interest loans to members.

Finance companies

Take over store contracts and add fees for collections; may back credit cards.