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PF Test 1
Test 1 Vocabulary
| Term | Definition |
|---|---|
| Budget | A plan for managing income and expense over a specific period. |
| Gross Income | Total earnings before taxes and deductions |
| Net Income | Earnings after taxes and deductions- "take home pay" |
| Passive Income | Earnings from investments or other sources not directly tied to active work |
| Expense | Cost or expenditures incurred for goods and services |
| Fixed Expenses | Regular unchanging costs (rent, subscriptions, etc...) |
| Variable Expenses | Costs that can change from month to month (entertainment, dining out, etc...) |
| Savings | Money set aside for future use, often in a savings account |
| Short Term Goals | Savings for specific, near future purposes, such as a vacation or a new computer. |
| Long Term Goals | Investments for major life events, such as buying a house, retirement, or yours or a child's education. |
| Investment | Assets purchased with the expectation of earning a return |
| Interest | This has 2 meanings. 1. The cost of borrowing money or 2. the return on savings/investments. |
| Return on Investment (ROI) | A measure of the profitability of an investment. |
| Debt | Money borrowed that must be repaid (e.g., loans, credit card balances). |
| Credit | The ability to borrow money or access goods and services with the agreement to pay later. |
| Credit Score | A numerical representation of a person’s creditworthiness based on their credit history. |
| Interest Rate | The percentage charged on borrowed money or earned on savings. |
| Taxable Income | Income subject to tax, including wages, interest, and investments. |
| Tax Deduction | An expense that can be subtracted from gross income to reduce taxable income. |
| Tax Credit | An amount that can be directly deducted from the taxes owed. |
| Fraud | Wrongful or criminal deception intended to secure financial gain. |
| Identity Theft | The unauthorized use of someone’s personal information to commit fraud or other crimes. |
| Insurance | A financial product that provides protection against specific risks or losses (e.g., health insurance, auto, etc...) |
| Checking Account | A bank account used for daily transactions, such as deposits and withdrawals. |
| Savings Account | A bank account that earns interest on deposited funds. |
| Debit Card | A card you can use to make payments directly from your checking account or to take cash from the account at an ATM. |
| Credit Card | A card allowing for purchases on credit, to be repaid later. |
| Loan | Money borrowed that must be repaid with interest (Ex. Student, Car, Home, etc...) |
| Mortgage | A loan specifically for purchasing property. |
| Net Worth | The value of everything you own (Assets) minus everything you owe (Liabilities) |
| Asset | Something of value owned by an individual |
| Liability | A financial obligation or debt owed by an individual |
| Liquidity | The ease in which an asset can be converted into cash without affecting its price. |
| Specific | The "S" in Smart Goals - Make you goal clear and exact |
| Measurable | The "M" in Smart Goals - You can track your progress |
| Achievable | The "A" in Smart Goals - Make sure it's something you can actually do. |
| Relevant | The "R" in Smart Goals - It should matter to you. |
| Time Bound | The "T" in Smart Goals - Set a deadline |
| Wants | Things we desire, but can live without |
| Needs | Essentials required for survival and well being |
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