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Personal Finance - 1
Terms in this set (60)
Contract made with an insurance company that provides for a series of payments to be received at stated intervals (usually monthly) for a fixed variable time period.-payment plan
a wavelike pattern of rising and falling economic activity; the phases include expansion, peak, contraction (which may turn into recession), and trough.
A type of employee benefit plan where employees are offered a choice between cash (which is taxable) and at least one other nontaxable benefit, which are qualified as nontaxable or tax-sheltered benefits.
Here a country's economy, its trade and industry, are controlled by private owners who see profit.
Earning of interest on interest and arises when interest is added to the principal so that, from that moment on, the interest that has been added also earns interest.
The addition of interest to principal; the effect depends on the frequency with which interest is made and the periodic interest rate that is applied.
Consumer price index (CPI)
A broad measure of changes in the prices of all goods and services purchased for consumption by urban households.
An initial portion of any loss that must be paid before collecting insurance benefits.
A broad, sustained decline in prices of good and services that is hard to stop once it takes hold, causing less consumer spending, lower corporate profits, declining home values, rising unemployment, and lower incomes.
A time period when credit use shrinks in an economy instead of expanding as during normal economic times.
A condition of increasing production (business spending) and consumption (consumer spending) in the economy and hence increasing national income.
Any economic statistic, such as the unemployment rate, GDP, or the inflation rate, that suggest how well the economy is doing now and how well it might be doing in the future.
Compensation for employment that does not take the form of wages, salaries, commission or cash payment.
The Federal Reserve Board, an agency of the federal government
Federal funds rate
the short term rate at which banks lend funds to banks overnight so that the borrowing bank has sufficient reserves as mandated by the Fed
A financial advisor must always act in the best interest of the client at all times regardless of how it might affect the advisor
The experience you have when you are satisfied with your money matters, which is part of having good financial behaviors.
Knowledge of facts, concepts, principles and technological tools that are fundamental to being smart about money.
An investment professional who evaluates the personal finances of an individual or family and recommends strategies to set and achieve long-term financial goals.
The comfortable feeling that your financial resources will be adequate to fulfill any needs you have as well as most of your wants.
The achievement of financial aspirations that are desired, planned, or attempted, as defined by the person who seeks it.
A state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and make choices that allow them to enjoy life.
- Means that you are accountable for your future financial well being and that you strive to make wise personal financial decisions.
Flexible spending account (FSA)
An employer-sponsored account that allows employee-paid expenses for medical or dependent care to be paid with an employee's pretax dollars rather than after-tax income.
The valuation of an asset projected to the end of a particular time period in the future
Gross domestic product (GDP)
The nations broadest measure of economic health; it reports how much economic (all goods and services) has occurred within the US borders during a given period
Health care plans
An employee benefit designed to pay all or part of the employees medical expenses
Health savings accounts (HSAs)
A tax-advantage medical savings account for those who have a high-deductible health care plan whereby all funds put into account are 100 percent tax deductible from gross income when used for health care expenses
High-deductible health plan (HDHP)
A plan that requires individuals to pay a higher deductible to cover medical expenses before insurance plan payments begin; chosen to save money on premiums
Index of leading economic indicators (LEI
Four composite index reported monthly by the conference board that suggests the future direction of the US economy.
the process by which the cost of goods and services tends to rise over time.
the charge for privilege of borrowing money, typically expressed as a annual percentage rate
Investment policy statement
a written document that spells out the relationship between an investor and his or her financial advisor and guides how the advisor will invest the persons money; it should detail the persons investment philosophy, financial situation, and the risk he or she is willing to take, as well as what tasks the advisor will perform.
assets purchased with the goal of providing additional future income from the asset itself.
Leading economic indicators
statistics that change before the economy changes, thus helping predict how the economy will do in the future, such as the stock market, the number of new building permits, and the consumer confidence index.
Level of living
refers to the level of wealth, comfort, material goods and necessities one is currently living
The additional (marginal) of one more incremental unit of some item.
Marginal Tax Rate
the tax rate at which your last dollar earned is taxed and it refers to the highest tax bracket that your taxable income puts you in.
the extra satisfaction derived from gaining one more incremental unit of a product or service.
an employer may voluntarily contribute a certain amount of money to an individual's retirement account according to the account the employee contributes.
also called money income; that has not been adjusted for inflation and decreasing purchasing power.
Policies of employers and/or the government to help get consumers to do what is good for them.
that which we believe may have been valid at one time, if it ever was true in the first place
the opportunity cost of any decision is the value of the next best alternative that must be foregone
the study of personal and family resources considered important in achieving financial success; it involves how people spend, save, protect, and invest their financial resources
money income that has not been taxed by the government
face amount of a bond or the original amount invested
measure of the goods and services that one's income will buy
Rule of 70
Standard of living
Financial advisors who are held to a standard for advice giving where they are free to sell securities generating the heftiest profits and commissions, as long as they are judged "suitable" for a client based on factors like age or risk tolerance.
This amount is determined by subtracting various exclusions, adjustments,exemptions, and deductions from total income, with the result being the income upon which the income tax is actually figured.
Income that is legitimately exempt from income taxes and may or may not be subject to taxation in a later tax year.
Tax-sheltered retirement plan
Employer sponsored, defined contribution retirement plans including 401(k) plans and similar 403(b) and 457 plans
Time value of money
A method by which one can compare cash flows across time, either as what a future cash flow is worth today (present value) or what an investment made today will be worth in the future (future value). Also, the cost of money that is borrowed or lent; it is commonly referred to as interest and adjusts for the fact that dollars to be received or paid out in the future are not equivalent to those received of paid out today.
Giving up one thing for another.
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