Personal Finance Final Exam

values beliefs and principles that a person considers important, correct, and desirable
future value the amount that your original deposit will be worth in the future based on a specific interest rate over a specific period of time
liquidity ability to easily convert financial resources into cash without loss of value
time value of money increase in an amount of money as a result of interest or dividends earned
demand amount of goods and services people are willing to buy
personal financial planning the way you spend, save, and invest your money to have the kind of life you want as well as financial security
principal amount of money deposited and on which interest is paid
economics study of the decisions that go into making, distributing, and using goods and services
inflation general rise in the level of prices for goods and services over time
present value amount of money you need to deposit now to attain a desired amount in the future
long-term goals Financial plans that are more than five years off are called ________________.
opportunity cost The trade-off made by making one choice instead of another is commonly referred to as a(n) _______________.
short-term goals Saving for vacation next summer or paying off small debts are examples of ______________.
personal financial planning Spending, saving, and investing to have the kind of life you want and financial security can be achieved by _______________.
the reason you want a particular job A cover letter gives a potential employer ______________.
retirement plan funded in part by employers A pension plan is a ______________.
Résumé a one- or two-page summary of your education, training, experience, and qualifications
Potential earning power the amount of money you may earn over time
standard of living a measure of the quality of life based on the amounts and kinds of goods and services a person can buy
networking a way of making and using contacts to get job information and advice
career a commitment to work in a field that you find interesting and fulfilling
down payment a portion of the total cost of an item that must be paid at the time of purchase
fraud dishonest business practices that is meant to deceive, trick, or gain an unfair advantage
mediation the attempt by a neutral third party to resolve a conflict between a customer and a business through discussion and negotiation
arbitration the process in which a conflict between a customer and a business is resolved by an impartial third party whose decision is legally binding
class-action suit a legal action on behalf of all the people who have suffered the same injustice
setting financial goals The first step in planning a budget is _______________.
inaccessibility A good budget has all the following characteristics EXCEPT _________________.
automobiles Products often purchased using price negotiation are _______________.
quantity and quality are basically the same The lowest price is generally the wisest choice when ________________.
impulse buying When shopping, avoid ______________.
personal financial statements documents that provide information about your current financial position and present a summary of your income and spending
net worth the difference between the amount you own and the debts you owe
liquid assets cash and items that can be quickly converted to cash
market value the price at which a property could be sold
safe-deposit box a small, secure storage compartment that can be rented in a bank
liabilities the debts that you owe
certificate of deposit (CD) a savings alternative in which money is left on deposit for a stated amount of time to earn a specific rate of return
surplus extra money that can be spent or saved
annual percentage yield the percentage of increase in the value of savings from earned interest
debit card a card issued by a financial institution that allows you to withdraw money from your account or pay for purchases by deducting funds directly from your account
certificate of deposit What financial services is best suited for saving money over a period of years?
borrow money for a short term Credit cards allow you to ______________.
$106.18 If you deposit $100 in an account with an annual interest rate of 6 percent compounded monthly, after 12 months you will have ____.
comparing checks in the check record with those on the statement The first step in balancing a checkbook is ___________________________________.
a credit card charge An example of open-end credit is a(n) ____________.
Notify the creditor in writing. How should a cardholder begin to correct a mistake on a credit card bill?
capital Which of the “five Cs of credit” require that a person’s assets exceed his or her liabilities?
policy A person joins an insurance company by purchasing a contract called _____.
risk In insurance, anything that may possibly cause a loss is known as a ______.
shifting Buying an insurance policy is an example of risk ______.
depreciation Which term refers to loss in value as an item gets older?
damage to the vehicle of the insured person no matter who is at fault Collision insurance covers ______________.
receives several traffic tickets A driver’s insurance premium will increase if he or she _______.
documentation of personal belongings A household inventory is ________.
Job A type of employment with a short term intentions and money as an end goal.
Career A long term form of employment with the fulfillment of life long goals as a motivation
Wages Hourly pay in exchange for labor
Salary Weekly-monthly pay typically for someone in a career setting
Degree A certification from a university or college in a specific field of study
High School Diploma Certification of completion of high school- typically makes half of what a degree earner makes over time
Associate’s Degree Certification from a college or university that typically takes 2 years to earn
Bachelor’s Degree Certification from a college or university that typically takes 4 years to earn
Master’s Degree Certification that follows a Bachelor’s and requires 2-7 years to complete
Doctorate Highest degree that one can obtain that may require up to 10 years of study
Grace Period Time period allowed for one to obtain employment following college graduation before one must begin repaying student loans
Organized Financial Documents The first step in successful money management
Budget A term used to describe a plan for spending and investing
Needs Food, water, and shelter
Wants Items or experience that are considered luxury and not necessarily mandatory for survival
Fixed expenses Expenses that cost one the same amount each month
Variable expenses Expenses that change month to month
Gross Pay The total amount of money given to an individual by an employer before anything is deducted
Net Pay The total amount of take home pay one is given after deductions are taken out
Income Tax Taxes that are required to be taken out of a person’s gross pay
SMART goal Specific Measurable Attainable Realistic and Time Sensitive
Deductions Anything from income tax, medicare, social security, insurance, and a retirement fund that is taken out of someone’s paycheck
Potential Earning Power The amount of money and opportunities that could be given to a person over a period of time in a specific career
Direct Deposit Payment that is automatically placed in a person’s bank account by their employer (no physical check)
Cost of Living A variable that changes city to city depending on the cost of everyday items
Cafeteria Style Benefits Benefits options that let an employee only take what they want or need
401(k) Retirement plan for a private sector employee
403(b) Retirement plan for a public sector employee
Educational reimbursement Payment given to an employee in order for them to obtain a higher level of education
Inflation Phenomenon that takes place every year and causes money to be worth less over time
IRS Internal Revenue Service
W-4 Tax withholding paper work that is filled out at the beginning of a job
W-2 Tax and payment information sheet that must be given to em employee by January 31st
1099 Tax form that is given to employees that work on project based employment
1040EZ A simplified tax form that citizens can file if they make under $100,000 and have no dependents
FDIC Federal Deposit Insurance Corporation
$250,000 Amount of money that the FDIC insures
Checking Account A bank account that can be accessed an unlimited number of times
Debit Card Payment card that is linked with a checking account
Automatic Draft Payment A bill that is automatically deducted from one’s banking account every month
Post-Date A check that is written for a future date- a form of check fraud
Bounce a Check The practice of overdrafting a checking account
Saving Putting money away over time in order to afford a tangible item or an experience
Investing Putting money into business ventures with more money being the end goal
Emergency Fund The minimum amount of savings that one should have put away in case unexpected emergencies arise
Savings Account A bank account that can only be accessed a few times a month without penalty
Credit Union A financial institution designed to serve its members and therefore provides the lowest interest rates to lenders
Commercial Bank Financial institution that provides basic checking and savings accounts to its members
Certificate of Deposit A savings account with a certificate that cannot be accessed for a certain number of years and has an average 1% return on investment
Money Market Account A savings account and an investment with a higher return rate and the ability to withdraw money if necessary a very limited number of times
Future Value The amount a given investment will be worth on a certain date after a certain amount of time
Simple Interest Interest on a loan that only affects the principle amount
Compound Interest Interest on a loan and interest that has accrued over time
Rule of 72 Rule stating that if you divide the interest rate for an investment by 72 then you will get how many years it will take the investment to double
IRA Individual Retirement Arrangement
Stock Shared ownership in a company
Bonds Money lent to a company in the form of an investment
Annuities Insurance policies that allow the policy holder to receive a fixed income after retirement until their death
Credit Card A form of payment that reflects money owed to a financial institution
Credit Money lent to a person for many small purchases or one large purchase
Finance Charges Additional charges such as interest applied to a lender who is receiving money from a financial institution
Convenience User A credit card user who avoids finance charges by paying their entire amount off each month
Credit Score A rating between 300-850 that reflects how reliable a person is as a lender
The 3 Credit Bureaus Equifax, Experian, Transunion- One free one per year
20-30% Down Payment The proper amount of a value for a house that should be put down before financing
Home Equity Loan A type of loan that can be taken out against the value of payments that have been made of one one’s home. The home is used as collateral.
Payday Lenders Predatory lenders that often charge very high interest rates
Debt Consolidation Combining all debts into one to make for easier monthly payments
Liability Auto Insurance The minimum insurance required by law in order to drive
Bankruptcy A legal status showing that one cannot afford to pay off debts- does not forgive student loans
Beneficiary The person who receives benefits once a life insurance policy pays out
Transfer Risk The main purpose of insurance
EPA Environmental Protection Agency- Agency responsible for the safety and health of the American people and the environment
FCRA Fair Credit Reporting Act- Make its so that all information in ones credit report is accurate
ECOP Equal Credit Opportunity Act- Makes it illegal discriminate access to credit based off of race, gender, marital status, disability level, etc.
Liquid Asset Assets such as a saving account, checking account, or cash that can be easily spent if necessary
Net Worth The value of all a person’s assets that can be raised by adding assets or paying off debts.
Win-Win Situation that should be created during any negotiation

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