Financial Literacy II (part 2 financial terms)

Entrepreneur

A person who assumes the risk to start a business with the idea of making a profit.

Credit History

A record of your borrowing and paying habits. Credit reporting companies track your history and supply this information to credit card companies, banks, and other lenders.

Lien

A right given to a lender over a borrower's property or money when the borrower cannot pay a debt.

Check Register

A small booklet that comes with your checkbook to help you record all of your deposits, ATM withdrawals, debits, and checks you write. If you keep this current, you will always know how much is in your account.

Variable Expenses

kinds of spending that can be controlled and typically change from month to month. For example, groceries can be a variable expense. You can choose to buy expensive food, (steak, lobster, lamb chops, or shrimp) or inexpensive food (chicken legs, turkey, hamburger). With variable expenses, you have choices.

Withdrawal

the act of taking money out of an account.

Net Pay

the amount of your income or paycheck after any deductions - like taxes or insurance payments - are subtracted. This is your take-home pay.

Interest

the amount paid by a borrower to a lender for the privilege of borrowing the money.

Credit Rating/Score

This is a score or grade that credit companies assign to you based on how you handle your money and pay your bills.

Insure

To protect yourself from loss. You pay premiums (payments) to an insurance company who, in turn agrees to pay losses to your property or person in case of injury.

Discount

To reduce from an original price or an item's full worth.

Stock

A certificate representing a share of ownership in a company.

Liquid

An investment that can be easily turned into cash. (examples: money in an account, stocks, or bonds. An example of something non liquid would be real estate because it can take a long time to sell it.)

Save

Hanging onto your money for a future use rather than spending it.

Real Estate

Property in the form of land or buildings.

Commodities

Raw materials- such as oil wheat, copper, coffee, water, natural gas, gold, or livestock you buy. In buying commodities you are hoping that the price will rise, so that you can sell the commodity for a profit.

Standard of Living

The level of material well-being of an individual or group.

Savings Account

a bank account that pays you interest for keeping your savings in it. Banks use your money to make loans, so they pay you interest for the use of your money. Your savings is insured up to $100,000 by the FDIC, so you don't have to worry about borrowers taking your money and not paying it back.

Stock Market

an organized way for 1) people to buy and sell stocks and 2) corporations to raise money. There are three widely known stock exchanges: The New York Stock Exchange, the American Stock Exchange, and the National Association of Securities Dealers Automated Quotation System (you hear it called NASDAQ on the news).

Loan

money or an object that is lent, usually with the understanding that the loan will be paid back, usually with interest

Income Tax

money that wage earners pay the government to run the country. The amount of the tax depends upon how much you earn.

Unearned Income

money you make that is not the result of your labor, such as interest from a savings account or other kind of investment.

Diversify

to spread out the money you invest into different types of investments: bonds, stocks, CDs, mutual funds, etc. The idea is to avoid putting all your eggs in one basket. Different kinds of investments do well in different kinds of economic climates.

Investment

using your money to try to make more money - for example, by depositing money in a bank or by buying a bond or stock in a company.