Upgrade to remove ads
Only $2.99/month

Personal Finance vocab exam

Terms in this set (45)

annual fee
A yearly fee that's charged by the credit card company for the convenience of the credit card
annual percentage rate
Cost of borrowing money on an annual basis; takes into account the interest rate and other related fees on a loan.
credit card
Type of card issued by a bank that allows users to finance a purchase
credit report
A detailed report of an individual's credit history
credit score
A measure of an individual's credit risk; calculated from a credit report using a standardized formula
debt snowball
Preferred method of debt repayment; includes a list of all debts organized from smallest to largest balance; minimum payments are made to all debts except for the smallest, which is attacked with the largest possible payments
depreciation
A decrease or loss in value
introductory rate
An interest rate charged to a customer during the early stages of a loan; the rate often goes up after a specified period of time
loan term
Time frame that a loan agreement is in force, and before or at the end of which the loan should either be repaid or renegotiated for another term
tax deduction
An expense, such as a charitable contribution, that can be deducted from one's taxable income
FAFSA (Free Application for Federal Student Aid)
A form that is completed annually by current and prospective college students to determine their eligibility for financial aid
Grant
A form of federal or state financial aid that does not need to be repaid; usually given to students who demonstrate financial need
Scholarship
A form of financial aid that does not need to be repaid; usually awarded on the basis of academic, athletic or other achievements
work study
A program that allows students to work part time while continuing their studies
branding
The promotion of a product or service by identifying it with distinct characteristics (usually associated with public perception, quality or effectiveness)
brand recognition/awareness
Refers to the public's ability to recall and recognize a brand by its logo, jingles, packaging, etc.
buyers remorse
Feeling regret or concern after making a large purchase
caveat emptor
Latin term for "buyer beware"
financing
To buy an item with credit; paying over time
marketing
the process of communicating the value of a product or service to costumers
opportunity cost
Refers to the financial opportunity that is given up because you choose to do something else with your money
significant purchase
An amount of money you spend, usually $300, that causes some pain to part with
consumer
a person/organization that uses a product or service.
Credit
the granting of a loan and the creation of debt; any form of differed payment.
debt
An obligation of repayment owed by one party to a second party; in most cases this includes repayment of the original loan amount and interest.
economy
a system by which goods and services are produced and distributed.
Financial Literacy
knowledge and skill set necessary to be an informed consumer and manage finances effectively.
interest
A fee paid by a borrower to the lender for the use of borrowed money; typically interest is calculated as a percentage of the principal (original loan amount)
loan
A debt evidenced by a "note," which specifies the principal amount, interest rate and date of repayment
Personal Finance
All of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, etc.
compund interest
interest paid on interest previously earned; credited daily, monthly, quarterly, or semiannually.
emergency fund
5 hundred dollars in readily available cash to be used only in the event of an emergency; the goal of the first foundation.
interest rate
% paid to a lender for the use of borrowed money (in debt); % earned in invested principle (in investing).
five foundations
the five steps to financial success
sinking fund
saving money over time for a large purchase.
budget
a written cash flow plan
cash flow statement
A summary that shows total income and spending for a given time period
carbon check
A copy of each check you write
envelope system
Series of envelopes that are divided into categories (food, entertainment, gas, etc.) and are used to store cash for planned monthly expenses
impulse purchase
An item that is bought without previous planning or consideration of the long-term effects
overdraft
Occurs when money is withdrawn from a bank account and the available balance goes below zero
reconcile
To match your bank statement with your checkbook
Zero-Based Budget
A cash flow plan that assigns an expense to every dollar of your income, wherein the total income minus the total expenses equals zero
Liquidity
Quality of an asset that permits it to be converted quickly into cash without loss of value; availability of money
Diversification
The practice of dividing the money a person invests between several different types of investments in order to lower risk
YOU MIGHT ALSO LIKE...