Important PFET vocab terms for CCBC PFET class
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| Financial Literacy | Use of knowledge + skills for earning, saving spending, and investing to reach personal, family and community goals
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| Financial Plan | formal report that details current financial situations, needs and required action
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| Adult Life Cycle | stages of an adults financial needs (factors like marital status, number of dependents, employment, health, career changes, and retirement)
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| Economics | The study of how wealth is created & distributed
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| Inflation (stagflation) | Rise in prices (without a rise in income)
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| Hidden Inflation | A disproportionate rise in cost of necessities
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| Deflation | Decrease in prices (not necessarily beneficial, can cause reduced spending)
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| Interest Rates | The cost of borrowing money
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| Short Term Goals (time span) | Achievable in under a year
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| Intermediate Goals (time span) | Achievable in 2-5 years
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| Long Term Goals (time span) | Achievable in 5+ years
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| Consumable Product Goals | Goals centered on periodically/frequently buying goods that are quickly used (food, clothes, recreational needs)
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| Durable Product Goals | Rare and expensive purchases (cars, appliances, sports equipment, boats)
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| Intangiable Goals (nonfinancial goals) | general life goals that deal with lifestyle, relationships, health, etc.
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| SMART | Smart
Measurable
Action Based
Realistic
Timely
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| Risk Premium | Concept that riskier financial choices must have higher return (bonds v. stock)
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| Opportunity Cost | What you give up when making a choice - a trade off (can be personal or financial)
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| Future Value (FV) | Amount of money available at a later date, based on the alteration of an initial deposit through interest, investment, compounding, etc.
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| Present Value (PV) | Current amount of money in realtion to the desired future Value
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| Time Value of Money (TV of $) | The amount of time needed to change the PV to FV
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| The 5 Methods for Calculating TV of $ | Formula calculation, tabular method, financial calculator, spread sheet software, website/app software
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| Annuity | Series of equal deposits/payments
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| Compounding | The inclusion of interest in future interest returns (used in FV calculations)
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| Discounting | How much is necessary to deposit to get desired FV
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| Consumer Price Index (CPI) | The change of the cost of a fixed amount of goods and services for an urban American
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| Robo-Advisor | automated programs used to guide financial Planning based on inputted financial information
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| Safe Deposit Box | Safe, private storage in a financial institution
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| Assets | Money, and tangible property (liquid assetss, real estate, expensive belongings, investment assets)
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| Liabilities | Amount owed to others (current debts, and long terms debts)
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| Insolvency | Inability to pay debts when they're due
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| Cash flow Statement | Summary of cash receipts and payments for a given period
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| Income | Inflow of cash for an individual or household (includes salary, government aid, social security payments, life insurance payments, etc.)
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| Take Home Pay (net pay (disposable income) | Income after taxes and other deductions
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| Discretionary Income | Disposable income - cost of necessities: left over money to spend on entertainment, goals, wants, etc.
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| Fixed Expenses | Payments that don't change from month to month
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| Variable Expenses | Payments that may change from month to month
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| Budget Variance | Difference between amount budgeted and actual amount spent or saved ( for spending, + is good b/c it means you have surplus left over)
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| Excise Tax | A tax on luxuries like cigarettes, alcohol, gasoline, etc.
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| Estate Tax | Taxing Property of the deceased
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| Inheritance Tax | Taxing items under $15,000 passed on through inheritance
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| Tax-Deffered Income | Taxes paid at a later date
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| Adjusted Gross Income | Includes income after IRA payents, penalties for early withdrawal and alimony
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| Tax Shelters | Investments with immediate tax benefits and future financial returns
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| Standard Deduction | Tax deduction using marginal tax rates
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| Itemized Deductions | Additional deductions for medical/dental over 10% AGI, casualty/theft loss, contributions to charity
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| W-2 | Tax form from employer that details the taxes witheld by the employer and gross income
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| W-2 P | Tax from that details interest, dividends, and investment income
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| 1099 | Tax form for self-employment, royalties, retirement, interest and dividends
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| Average Tax Rate | Percent of taxable income that went towards total tax payments (usually less than the marginal tax rate)
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| Alternative Minimal Tax | Makes sure those with excessive tax benefits still pay their fair share in taxes
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| Tax Credits | Reductions directly from taxes owed (childcare, EIC, foreign, savers, adoption, education)
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| Earned Income Credit | A tax credit for parents making under a certain income
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| 4868 | Tax for that allows for an extension on the 1040 form
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| 1040 | Main tax filing form (used to be three forms, but now complied into one)
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| Tax Audits | Reviews of tax returns
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| Correspondence Audit | Audit through email that usually references minor errors in tax forms
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| Office Audit | Audit that demands an individual create an appointment with an IRS offic that usually deals with major aspects of the return
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| Field Audit | The IRS visits a home or office address to confirm certain costs on the return
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| Tax Avoidance | Using legal/legit methods to reduce taxes paid
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| Tax Evasion | Using illegal methods to reduce taxes paid
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| Tax-Exempt Investments | Investments that taxes don't have to be paid on
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| Capital Gains | Profits from the sales of stocks, bonds or real estate that have been owned for over a year (tax-deffered)(not paid until asset is sold)
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| Standard IRA | Deduction only for people who don't use eployer-sponsored retirement (only applicable to people under a certain AGI)
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| Roth IRA | Not tax deductible, but earnings after 5 years are tax free (only for people under a certain AGI)
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| Sep - IRA | for self employed business owners, can contribute up to 25% of an employees annual income so long as they're 21+ and have worked with the business for 3+ years
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| 401k | Tax-defered retirement plan that that's sponsored by an employer with a max acontribution of either $19,500 or 15% of annual income
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| Coverdell | Education savings account that can put away $2,000 and can be used for any qualified education cost
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| 529 | Education savings account that has no deduction, but earnings are tax free (only for college)
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| Flat Tax | Everyone pays the same tax
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| Value Added Tax | Increased Sales tax for items that have gone through more manufacturing steps
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