Chapter One Personal Finance
Financial plan
A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities.
Inflation
A rise in the general level of prices.
Bankruptcy
A set of federal laws allowing you to either restructure your debts or remove certain debts.
Values
Ideas and principles that a person considers correct, desirable, and important.
time value of money
Increase in an amount of money as a result of interest earned.
Future Value
The amount to which current savings will increase based on a certain interest rate and a certain time period; also referred to as compounding.
Present Value
The current value for a future amount based on a certain interest rate and a certain time period; also referred to as discounting.
personal financial planning
The process of managing your money to achieve personal economic satisfaction.
Adult life cycle
The stages in the family situation and financial needs of an adult.
Economics
The study of how wealth is created and distributed.
opportunity cost
What a person gives up by making a choice.