Foundations in Personal Finance – Ch. 1: Intro. to Personal Finance

Credit system a system for allowing people to purchase things on credit
employment Having a job or career and responsibilities that go with it
income instability How much a person(s) income fluctuates over time.
utilize To use
profit the amount of money left over after all the bills (expenses) have been paid
indication a sign or piece of information that suggests something
personal financial plan Arranging to spend, save, and invest money to live comfortably, have financial security, and achieve goals.
assess evaluate or estimate the nature, ability, or quality of something
income Money earned from investments and employment.
asset Anything of value that is owned (house, car, computer, bank account, investments, etc.)
liability A debt; money you owe to someone else; property that you do not own
budget A plan for making and spending money
sufficient Good enough, adequate
eliminate Get rid of
promote encourage, support
trial and error A problem-solving strategy that involves attempting different solutions and eliminating those that do not work.
highly complex very complicated
achieve Accomplishing something rewarding
profitable bringing advantage or monetary gain
key components the most important parts
reassess to take another look at something to see if anything has changed and if adjustments need to be made
outsmarted to be fooled by someone.
lender Person who lends someone money to buy an item
marketed to advertise; to make someone want to buy your product
consumerism A social and economic order that encourages the purchase of goods and services in ever-greater amounts.
welfare Government aid to the poor
inherit the “stuff” (estate/assets) that is given to someone after a person dies.
invest funding an account with the expectation of achieving a profit or material result (shares/stocks/bonds, property, commercial venture, etc.)
dictate to command or tell what to do
missed opportunity something you wish you would have done
consequence A result (can be positive or negative)
amist prosperity in the middle of thriving financial conditions
consumer A person who purchases goods and services for personal use
Credit The granting of a loan and the creation of debt; any form of deferred payment.
Debt An obligation of repayment owned by one party (borrower) to a second party (lender); in most cases this includes repayment of the original loan amount plus interest.
Economy A system by which goods and services are produced and distributed.
Financial literacy The knowledge and skill-set necessary to be an informed consumer and manage finances effectively.
Interest A fee paid by a borrower to the lender for the use of borrowed money; typically interest is calculated as a percentage of the principal (original) loan amount.
Loan A debt evidenced by a “note” which specifies the principal amount, interest rate and date of repayment.
Personal Finance All of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, etc.
FDIC (Federal Deposit Insurance Corporation) Created in 1933 to restore public trust in banks and encourage stability in the financial system through the promotion of sound banking practices and insuring deposits of up to $250,000 per institution as long as the bank is a member.
Home Owner’s Loan Corporation (HOLC) Established in 1933, its purpose was to refinance home mortgages in default to prevent foreclosure.
Federal Housing Authority (FHA) U.S. government agency that insures loans made by banks and other private lenders for home building and home buying. Created as part of the National Housing Act of 1934. The goal was to provide adequate home financing through insurance of mortgage loans.
Electric Home and Farm Authority (EHFA) As part of the TVA (Tennessee Valley Authority), the EHFA purchased inexpensive electrical appliances and then made them available to working people through installment loans with a typical repayment period of three to four years. In an attempt to reduce farm foreclosures, loans were made available to farmers under this agency. These loans were used to refinance farm mortgages or provide capital for agricultural production.
Financial security When your money begins to generate income (a.k.a. your money starts working for you!)
generate Bring into being, produce, create, give rise to, be the cause of.
financial future What your finances look like at a future point in time.
effect A change that is a result or consequence of an action or other cause.
wealthy having an abundant supply of money or possessions of value
retire To stop working because one has reached a certain age
big-ticket items Expensive and significant purchases (cars, homes, college tuition, etc.)
language of money Financial vocabulary and terms
financial planner a specialist who is trained to offer specific financial help and advice
manage your money make your money do what you want it to do (save, budget, invest, etc.)
structure How something is put together
financial insecurity result of workplace discrimination, poor job security, and low income
high proportion a significant amount
credit card statement A monthly summary from a credit-card company conveying information about a cardholder’s purchases, payments, balance due and fees.
money personality individuals attitude towards money; not everyone has the same attitudes about money and its importance–spenders and savers
excessive Exceeding the usual, proper, or normal
socially acceptable cultural norm
credit industry businesses that loan money to individuals or other companies
commercial bank A for-profit institution that offers a full range of financial services, including checking, savings, and lending.
mortgage A loan to purchase a home or other real estate
loan sharks unlicensed lenders who charge illegally high interest rates
deferred payment putting off payment until the future, when it’s actually due
distribute To divide among a group of people.
principal The original amount borrowed
gross domestic product (GDP) The sum total of the value of all the goods and services produced in a single country

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