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Dollars and Sense
Termonology
| Term | Definition |
|---|---|
| Personal Financial Planning | Arranging to spend, save, and invest money to live comfortably,have financial security, and achieve goals (everything involving money) |
| Goals | Things you want to accomplish |
| Values | Beliefs and principles you consider important, correct,and desirable |
| Opportunity Cost | What is given up when making one choice instead of another |
| Liquidity | The ability to easily convert financial assets into sash without loss in value |
| Service | A task that a person of a machine performs for you |
| Good | A physical item that can be weighed or measured |
| Consumable Good | Ex. soda can and a phone |
| Durable Good | Ex. education (an intangible item) |
| Economics | The study of the decisions that go into making, distributing, and using goods and services |
| Economy | Consists of the ways in which people make, distribute, and use their goods and services |
| Supply | The amount of goods and services available for sale |
| Demand | The amount of goods and services people are willing to buy |
| Federal Reserve System | The central banking organization of the U.S. |
| Inflation | The rise in the level of prices for goods and services |
| Consumer | A person who purchases and uses goods or services |
| Interest | The price that is paid for the use of another's money |
| Time Value of Money | The increase of an amount of money due to earned interest or dividends |
| Principal | The original amount of money on deposit |
| Future Value | The amount your original deposit will be worth in the future based on earning a specific interest rate over a specific period of time |
| Annuity | A series of equal regular deposits |
| Present Value | The amount of money you would need to deposit now in order to have a desired amount in the future |
| Fixed Expanses | Have the same amount of money due every month |
| Variable Expenses | Have different amounts of money due each month depending on how much you use it or buy of it |
| 6 Steps to Create a Financial Plan | 1.Determine current financial situation 2.Develop financial goals 3.Identify options 4.Evaluate alternatives 5.Create and use financial plan 6.Review and Revise the plan |
| 8 strategies | Obtain, plan, spend wisely, save, borrow wisely, invest, manage risk, and plan for retirement |
| Short term Goal | Accomplish in less than a year |
| Intermediate Goal | Accomplish in 2-5 years |
| Long term Goal | Accomplish in more than 5 years |
| Future Value Equation | principle X interest rate= interest interest+principal=? |
| Economic Conditions | Consumer prices, consumer spending, and interest rate |
| Goals should be... | Realistic, Specific and clear. Also have a clear time frame and help you decide what action to take. |
Created by:
herrerasa14
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