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Financial Literacy
| Question | Answer |
|---|---|
| Financial Values | The principles or standards that guide an individual's financial decisions, often influenced by personal beliefs, family, culture, and life experiences. (financially literate vs. illiterate) |
| Financial Goals | Specific objectives or targets an individual wants to achieve with their finances, such as saving for a home, retirement, or education. (needs vs. wants) |
| Income | Money earned through wages, investments, or other sources, typically measured on a monthly or annual basis. (median household income) |
| Expenses | The costs incurred for goods and services, including both needs (essential expenses like rent) and wants (discretionary spending like entertainment). |
| Net Worth (Wealth) | The total value of an individual’s assets minus their liabilities (debts). |
| Assets | Resources owned by an individual or household, such as property, investments, and savings accounts, which have economic value |
| Liabilities (Debt) | Financial obligations or amounts owed to others, such as loans, mortgages, or credit card balances. (short vs. long term debt) |
| Delayed Gratification | The ability to resist the temptation for an immediate reward and wait for a larger or more enduring reward in the future, critical for long-term financial planning. |
| Saving | Setting aside money for future use, typically in a low-risk, easily accessible form like a savings account. |
| Investing | Allocating money with the expectation of generating a return, often through stocks, bonds, or mutual funds. |
| Opportunity Cost | The value of the next best alternative that is given up when making a decision, such as choosing to save money instead of spending it. |
| Fixed Expenses | Costs that remain consistent over time, such as rent or loan payments |
| Variable Expenses | Costs that change based on usage or circumstances, such as utilities or groceries |
| Zero-Based Budget | A budgeting method where every dollar of income is allocated to specific expenses, savings, or investments, ensuring no money is left unaccounted for. |
| Simple Interest | Interest calculated only on the principal amount of a loan or investment. |
| Compound Interest | Interest calculated on the principal and the accumulated interest from previous periods, allowing investments to grow at an accelerating rate. |
| Credit Score | A numerical representation of an individual’s creditworthiness, based on factors like payment history, debt levels, and credit history length. (5 categories) |
| Credit History | A record of an individual’s borrowing and repayment activities, which affects their ability to secure loans or credit |
| Budgeting | The process of creating a plan to manage income and expenses effectively, often to achieve specific financial goals. |
| 50/30/20 Rule | A budgeting guideline allocating 50% of income to needs, 30% to wants, and 20% to savings or debt repayment. |
| Taxes | Mandatory financial charges imposed by the government on income, purchases, or property, used to fund public services. (marginal tax brackets) |
| Inflation | The rate at which the general level of prices for goods and services rises, reducing purchasing power over time. |
| Insurance | importance of family health insurance / purpose of deductibles / liability coverage |
| Money Market account | |
| Charitable giving | Charitable giving vs. financially stable |
| FDIC | FDIC importance |
| ID theft | staying current on financial crimes reports |
| Sherman Anti-trust act | Sherman Anti-trust act |
| Federal Trade Commission | protects consumers |
| Truth in Lending Act | disclosing terms |
| Consumer Product Safety Act | buyers vs. sellers rights |
Created by:
malachibarton67