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Personal Finance U2
Unit 2 - Money Management
| Term | Definition |
|---|---|
| Spending plan | An income and expense statement sometimes referred to as a budget which records both planned and actual income and expenses over a period of time |
| Needs | Goods or services that are required for survival |
| Opportunity cost | The value of the next best alternative that must be forgone as a result of a decision |
| Trade‐off | Giving up one thing for another |
| Value | A fundamental belief or practice about what is desirable, worthwhile, and important to an individual |
| Want | The desire for goods and services that can increase our quality of life but are not absolutely necessary for our survival |
| Asset | Items of monetary value a person or household owns |
| Expense | Money spent |
| Income | Money received |
| Liability | A debt or obligation owed to others |
| Market value | The amount you could realistically sell an asset for today |
| Monetary asset | Assets that can be quickly and easily converted into cash |
| Net worth | A measure of financial wealth and indicates the monetary value of all possessions that a person or household owns, minus the total amounts owed to others |
| Statement of Financial Position | A financial statement that describes an individual or family’s financial condition on a specified date by showing assets, liabilities, and net worth |
| Tangible asset | Personal property that was purchased to create a lifestyle or improve your life |
| Wealth | A measurement of how much a person or household owns once all debts have been paid |
| Income and Expense Statement | Lists and summarizes income and expense transacons that have taken place over a specific period of me, usually a month or year |
| Net gain | When income is greater than expenses |
| Net loss | When expenses are greater than income |
| Savings | The poron of current income not spent on consumption |
| Financial goals | Specific objectives that are accomplished through financial planning |
| Goal | Something a person intends to acquire, achieve, or accomplish in the future |
| Long‐term goals | A goal that will be attained in more than one year |
| Short‐term goals | A goal that will be attained in less than one year |
| Automated teller machine (ATM) | A machine that allows individuals to complete certain transactions from the machine without human assistance |
| Checking account | An account that allows quick access to funds for transactions |
| Commercial bank | For‐profit depository businesses that offer financial services to both consumers and other businesses |
| Credit Union | Depository institutions that offer many banking services and are owned by their customers |
| Depository institution | Businesses that provide financial services |
| Interest | The price paid for using someone else’s money |
| Interest rate | The percentage rate used to calculate interest |
| Mobile banking | Apps that many depository institutions have developed that allow online banking access from devices such as smartphones, tablets and other mobile devices |
| Online banking | Allows customers to complete certain transactions from a secured Internet site by using a username and password from any place in the world with Internet access |
| Savings account | An account at a depository institution that is designed to hold money not spent on current consumption |
| Savings tool | Accounts offered by depository institutions whose main purpose is to help people manage their money |
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kb9115
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