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SFL 260 Exam 1
| Term | Definition |
|---|---|
| Steward | a person employed to manage another's goods or property. A person who's responsibility it is to take care of something |
| stewardship | responsibility to administer or attend to the assignments one receives in a church calling, or to take care of those things with which we are blessed from God, including families, neighbors, and even temporal blessings |
| charitable organization | an organization/group with the mission of performing social good |
| non-profit organization | a business/corporation created for a cause other than money/returning money to investors. they use their earnings to achieve their aims |
| 501(C)(3) | a non-profit that the IRS exempts from paying taxes, donating to charity only has US tax benefits if the charity is one of these. all of these are nonprofits but not all nonprofits are these |
| healthy relationship with money | view money as a tool, choose to act on your money, avoiding extremes |
| family financial records | family income and expense statements, family net worth statements, family spending plan/budget |
| ownership | the right to possess or own something |
| agency | the ability to choose |
| accountability | the obligation to account for one's actions or to accept responsibility |
| budget | a plan for how you are going to spend the money that is available to you |
| financial reserve | cash or other liquid assets held to cover 3-6 months of emergency expenses |
| speculation | any investment that promises a greater than market-rate return |
| income and expense statement | a record of your family's past cash inflows and outflows over a specified period of time |
| cash inflow | family income |
| cash outflow | family expenditures |
| fixed expenses | expenditures that your family has little direct control over and that do not often change from month to month |
| variable expenses | expenditures that your family controls and that may vary from month to month |
| net worth statement | a snapshot of your family's total assets minus your total liabilities on a particular day |
| liabilities | synonymous with debt, calculated by adding up the outstanding balances on any current and long-term family debts |
| assets | the monetary value of what your family owns that could be turned into cash |
| current market value | the price at which your family's asset could be sold in the present market environment |
| budget | a spending plan in which family income is allocated to specific categories of expenditures |
| SMART principle | goals should be Smart, Measurable, Attainable, Relevant, and Time-bound |
| Miscellaneous | one of your budget's most important but often neglected categories, a generous catch-all for those unexpected expenses which find the holes in your budget |
| ALT principle | avoid making purchases or financial decisions when you are Hungry, Angry, Lonely, or Tired |
| Time Value of Money (TVM) | how the value of money changes over time due to inflation and interest |
| Inflation | decrease in the purchasing power of money |
| Interest | renumeration for investing or loaning money |
| compound interest | interest earned on interest |
| investment | a current commitment of your money in the expectation of reaping future returns |
| present value | current value of money |
| principal | the original amount of money borrowed or invested (generally synonymous with present value) |
| interest rate | the rate you will receive for investing at a specified compounding period for a specified period of time (generally expressed in percent per year or APR) |
| nominal return | the return of an investment before the impacts of inflation and taxes are taken into account |
| after-tax return | the return on an investment after the impact of federal, state, and local taxes has been taken into account |
| real return | the rate of return on an investment after the impacts of taxes and inflation are taken into account |
| compounding periods (N) | the frequency with which interest is applied to an investment |
| Payment (PMT) | a periodic amount invested or received during the life of the investment (eg monthly payment, annual disbursement, dividend etc) |
| Future Value (FV) | the monetary value of an investment at some point in the future |
| Lump Sum | one payment at a specific time |
| Annuity | the disbursement of money on a periodic basis-a series of equal payments which are made at a specific time |
| Purchasing Power | the value of monetary funds based on the amount of goods or services that one unit of money can buy |
| Opportunity cost | the potential loss or gain that occurs when one financial option is chosen over another |
| Credit | a contractual agreement in which borrower receives something of value now and agrees to repay the lender at some date in the future, generally with interest; the term also refers to the borrowing capacity of an individual or company |
| Debt | something owed to someone else |
| 5 Cs of Credit | Character, Capital, Capacity, Collateral, Conditions |
| Character | the amount of integrity you demonstrate |
| Capital | the worth of all your assets |
| Capacity | your ability to repay the debt from your family's income |
| Collateral | an asset that can be pledged against a loan |
| conditions | the economic state of the nation or community at the time of a loan request |
| credit score | a three-digit number that is used by banks, insurance companies, and other financial institutions to determine how likely it is that you will be creditworthy and pay your debts on time |
| credit bureaus | private companies that collect and report your financial information from creditors, public records, and various institutions |
| credit reports | files of information that credit bureaus compile about specific individuals |
| credit evaluation | the process of turning the information in your credit report into a three-digit number to determine whether or not you deserve to be given credit |
| FICO Score | the most common type of credit score |
| credit card | a form of open credit that allows you to borrow money up to a specific limit with no collateral, with the expectation that you will pay back the money at a specific interest rate and with specific terms |
| race period | the period of time between a payment due and penalties |
| balance | the total amount owed on a credit card at a specific time |
| credit limit | the available credit given to a specific account holder |
| credit-holic | someone who is addicted to credit and whose financial life is out of control |
| plastic surgery | cutting up a credit card, making it unusable, but still keeping the account open |
| consumer loans | an amount of money lent to an individual for personal, family, or household purposes |
| single-payment loans | a type of short-term lending repaid in one lump sum that may be used to temporarily finance a purchase until permanent, long-term financing can be arranged |
| installment loans | loans that are repaid at regular intervals |
| secured loans | loans which use one of your assets as collateral to guarantee that the lending institution will get the amount of the loan back even if you fail to make payments |
| unsecured loans | loans which do not require collateral and are generally offered only to borrowers with excellent credit histories |
| fixed-rate loans | loans that maintain the same interest rate for the duration of the loan |
| variable-rate loans | loans which have an interest rate that is adjusted at different intervals over the life of the loan |
| convertible loans | loans in which the interest rate structure can change |
| loan contract | a document which describes what the lender requires of your family once you are granted the loan |
| Truth in Lending Act | a law which requires that all lenders provide the consumer with certain information before they sign the credit contract |
| Student Loans | loans which are often used to pay for higher education and have federally subsidized interest rates |
| automobile loans | short-term loans that are secured by the automobile the loan is paying for |
| payday loans | short-term loans of one or two weeks which are secured with a postdated check |
| family loans | borrowing and lending between family members |
| debt-elimination calendar | a strategy in which you plan out all debt repayments, paying all minimum payments but focusing mostly on one until it is paid off, then using the amount of money previously paid toward that debt to pay off the next most important debt |
Created by:
pworthen0723