Personal Finance Vocabulary Test – Flashcards
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spending, saving, and investing your money so you can have the kind of life you want as well as financial security
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personal financial planning
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the things you want to accomplish
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goals
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the beliefs and principles you consider important, correct, and desirable
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values
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what you give up when you make one choice instead of another
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opportunity cost
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the ability to easily convert your financial resources into cash without a loss in value
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liquidity
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a task a person or a machine performs for you
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service
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a physical object that is produced and can be weighed or measured
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good
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the study of the decisions that go into making, distributing, and using goods and services
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economics
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consists of the ways in which people make, distribute, and use their goods and services
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economy
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the amount of goods and services available for sale
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supply
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the amount of good and services people are willing to buy
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demand
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the central banking organization of the US
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Federal Reserve System
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the rise in the level of prices for goods and services
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inflation
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a person who purchases and uses goods and services
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consumer
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the price that is paid for the use of another's money
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interest
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the increase of an amount of money as a result of interest or dividends earned
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time value of money
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the amount of money you deposit and on which interest is paid
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principal
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the amount your original deposit will be worth in the future based on earning a specific interest rate over a specific period of time
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future value
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a series of equal regular deposits
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annuity
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the amount of money you would need to deposit now in order to attain a desired amount in the future
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present value
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work you do mainly to earn money
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job
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a commitment to work in a field that you find interesting and fulfilling
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career
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a measure of quality of life based on the amounts and kinds of goods and services a person can buy
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standard of living
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developments that mark changes in a particular area
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trends
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the amount of money you may earn over time
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potential earning power
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the natural abilities that people possess
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aptitudes
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the tests that help you identify the activities you enjoy the most
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interest inventories
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ways in which groups of people change over time
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demographic trends
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provide services for a fee, will offer some of the greatest employment potential in coming years
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service industries
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a position in which a person receives training by working with people who are experienced in a particular field
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internship
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programs that allow students to enhance classroom learning with part-time work related to their majors and interests
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cooperative education
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a way of making and using contacts to get job information and advice
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networking
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a meeting with someone who works in your area of interest who can provide you with practical information about the career or company you're considering
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informational interview
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a one- or two-page summary of your education, training, experience, and qualifications
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resume
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the personal letter that you present along with your resume
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cover letter
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programs that allow workers to choose the benefits that best meet their personal needs
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cafeteria-style employee benefits
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a retirement plan that is funded at least in part by an employer
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pension plan
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an experienced employee who serves as a teacher and counselor for a less experienced person
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mentor
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planning how to get the most from your money
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money management
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a small, secure storage compartment that you can rent in a bank
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safe-deposit box
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documents that provide information about your current financial position and present a summary of your income and spending
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personal financial statements
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a financial statement that lists the items of value that you own, the debts you owe, and your net worth
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balance sheet
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the difference between the amount you own and the debts you owe
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net worth
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any items of value that you own
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assets
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cash and items that can be quickly converted to cash
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liquid assets
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land that a person or family owns and anything that is on it
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real estate
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the price at which you could sell property or an item
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market value
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the debts that you owe
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liabilities
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the condition that occurs if your liabilities are greater than your assets
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insolvency
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the money that goes into and out of your accounts
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cash flow
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the money you receive, aka inflow
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income
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aka net pay, the amount of income left after taxes and other deductions are taken out of your gross pay.
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take-home pay
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the money left over after you have paid for the essentials
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discretionary income
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extra money that can be spend or saved
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surplus
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the situation that occurs if you spend more than you earn or receive
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deficit
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a plan for using your money in a way that best meets your needs and wants
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budget
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a measure of the changes in prices for commonly purchased goods and services in the US
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consumer price index
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the difference between the budgeted amount and the actual amount that you spend
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budget variance
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a portion of the total cost of an item that must be paid at the time of purchase
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down payment
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a nonprofit organization owned and operated by its members for the purpose of saving money on the purchase of goods and services
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cooperative
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purchasing items on the spur of the moment
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impulse buying
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indicates the freshness or "shelf life" of a perishable product
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open dating
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the use of a standard unit of measurement to compare the prices of packages that are different sizes
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unit pricing
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a partial refund of the price of a product
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rebate
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a written guarantee from the manufacturer or distributor that states the conditions under which the product can be returned, replaced, or reparied
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warranty
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a separately purchased agreement by the manufacturer or distributor to cover the costs of repairing the item
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service contract
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dishonest business practices that are meant to deceive, trick, or gain an unfair advantage
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fraud
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the attempt by a neutral third party to resolve a conflict between a customer and a business through discussion and negotiation
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mediation
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process where a conflict between a customer and a business is resolved by an impartial third party whose decision is legally binding
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arbitration
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court that deals with legal disputes that involve amounts below a certain limit
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small claims court
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a legal action on behalf of all the people who have suffered the same injustice
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class-action suit
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one of a network of community law offices that provide free or low-cost legal assistance
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legal aid society
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computer terminals that let you withdraw cash from your account
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automatic teller machine
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aka cash card, allows you to withdraw money or pay for purchases from your checking or saving accounts
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debit card
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using a debit card to purchase an item or service at a retail store, restaurant, or elsewhere
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point-of-sale transaction
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a for-profit institution that offers a full range of financial services, including checking, savings, and lending
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commercial bank
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traditionally specialized in savings accounts and mortgage loans
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savings and loan association
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nonprofit financial institution that is owned by its members and organized for their benefit
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credit union
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a time deposit that requires you to leave your money in a financial institution for a set amount of time
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certificate of deposit
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a savings account in which the interest rate varies from month to month
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money market account
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the percentage of increase in the value of your savings from earned interest
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rate of return
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the process in which interest is earned on both the principal - the amount you deposited - and on any previously earned interest
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compounding
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the amount of interest that a $100 deposit would earn, after compounding, for one year
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annual percentage yield
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an automatic loan made to you if you write a check for more money than you have in your account
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overdraft protection
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a request that an institution not cash a particular check
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stop-payment order
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the signature of the payee, the party to whom the check has been written to
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endorsement
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a report that accounts for the difference between the bank statement and your checkbook balance
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bank reconciliation
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an arrangement to receive cash, goods, or services now and pay for them later
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credit
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an entity to which money is owed
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creditor
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the use of credit for personal needs
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consumer credit
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a one-time loan that you will pay back over a specified period of time and in payments of equal amounts
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closed-end credit
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a loan that has a certain limit maid available
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open-end credit
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shows how much credit costs you on a yearly basis, expressed as a percentage
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annual percentage rate
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form of security to help guarantee that the creditor will be repaid
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collateral
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the interest computed only on the principal
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simple interest
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maximum amount of money the creditor has made available to you
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line of credit
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a time period during which no finance charges will be added to your account
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grace period
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the total dollar amount you pay to use credit
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finance charge
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the income you receive (take home pay, allowance, gifts, interest on accounts, winnings, etc.)
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net income
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the smallest amount you can pay and remain a borrower in good standing
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minimum monthly payment
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a measure of a person's ability and willingness to make credit payments on time
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credit rating
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you agree to be responsible for loan payments if the other party fails to make them
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co-signing
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businesses that collect debts for creditors
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debt collectors
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the condition of being deeply in debt
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indebtedness
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legal process in which some or all of the assets of a debtor are distributed among the creditors because the debtor is unable to pay his or her debts
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bankruptcy
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the way you choose to spend your time and money
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lifestyle
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the ability to move easily from place to place
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mobility
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a person who pays for the right to live in a residence owned by someone else
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tenant
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the person who owns the property that you rent
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landlord
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a legal document that defines the conditions of the rental agreement between the tenant and the landlord
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lease
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to have a person other than the original tenant take over the rental unit and payments for the remaining term of the lease
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sublet
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an amount of money paid to the owner of the property by a tenant to guard against an financial loss that the tenant might cause
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security deposit
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a type of insurance that covers the loss of a tenant's personal property as a result of damage or theft
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renters insurance
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the value of the home less the amount still owed on the money borrowed to purchase it
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equity
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regulations that limit how property in a given area can be used
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zoning laws
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a portion of the purchase price
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earnest money
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an account in which money is held in trust until it can be delivered to the designated party
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escrow account
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a special policy that protects the lender in case the buyer can't make payments, or can't make them on time
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private mortgage insurance
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a long-term loan extended to someone who buys property
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mortgage
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extra charges that must be paid by the buyer in order to get a lower interest rate
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points
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the balance of the loan is reduced every time you make a payment
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amortization
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offers a buyer a fixed interest rate and a fixed schedule of payments
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conventional mortgage
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has an interest rate that increase or decreases during the life of the loan
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adjustable rate mortgage
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if the borrower is unable to make paymets
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defaults
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a loan based on the difference between the current market value of your home and the amount you still owe on the mortgage
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home equity loan
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to take out a new mortgage at a lower interest rate
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refinance
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a meeting of the seller, the buyer, and the lender of funds or representatives of each party to complete the transaction
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closing
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the fees and chargers the seller and buyer must cover when a real estate transaction is complete
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closing costs
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a type of insurance that protects the buyer in case problems with the title are found later
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title insurance
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the official document transferring ownership from seller to buyer
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deed
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an estimate of the current value of the property
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appraisal
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money that you can access quickly for an immediate need
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emergency fund
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a high-risk investment made in the hope of earning a relatively large profit in a short time
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speculative investment
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profits reinvested in an organziation
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retained earnings
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the ability to buy or sell an investment quickly without substantially affecting its value
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investment liquidity
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money that a business gets from its owners in order to operate
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equity capital
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distributions of money, stock, or other property that a corporation sometimes pays to stockholders
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dividends
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stock that provides the most basic form of corporate ownership, and it entitles you to voting privileges
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common stock
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stocks that gives the owner the advantage of receiving cash dividends before common stockholders receive any
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preferred stock
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a corporation's written pledge to repay a specified amount of money, along with interest
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corporate bond
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the written pledge of a government or a municipality to repay a specific sum of money with interest
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government bond
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an investment alternative in which investors pool their money to buy stocks, bonds, and other securities based on selections of professional managers who work for an investment company
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mutual fund
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the process of spreading your assets among several different types of investments to lessen risk
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diversification
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a specialist who is trained to offer specific financial help and advice
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financial planner
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income that is not taxed
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tax-exempt income
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income that will be taxed at a later date
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tax-deferred income
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the profit from the sale of an asset such as stocks, bonds, or real estate
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capital gain
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the sale of an investment for less than its purchase price
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capital loss
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a document that discloses information about a company's earnings, assets, and liabilities, its products or services, and the qualifications of its management
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prospectus
