Financial Planning Vocab

Annuity

A level stream of cash flows for a fixed period of time.

Goals

A purpose/objective.

Safe-Deposit Box

A secured box in a bank used by clients for valuable personal items.

Assets

Any type of tangible or intangible resources that can be measured in monetary terms.

Net Worth

Assets minus Liabilities.

Real Estate

Buildings and Land.

Values

Cherished ideas and beliefs that affect decisions a person makes.

Discretionary Income

Disposable income available for spending and saving after an individual has purchased the basic necessities of food, clothing, and shelter.

Wealth

Having a large amount of money or property.

Future Value

How much spending power money has at a point in the future.

Present Value

How much spending power money has today.

Income

Money earned from investments and employment.

Take-Home Pay

Money received after all adjustments and deductions are made.

Time Value of Money

Money's potential to grow in value over time. The relationship between time, money, a rate of return, and earnings growth.

Market Value

Most probable price the property will sell for in an arm's-length transaction under normal conditions on the open market.

Interest

A sum paid or charged for the use of money or for borrowing money.

Good

A tangible product used to satisfy human wants.

Service

Activities that are consumed at the same time they are produced.

Principal

The original amount borrowed.

personal financial planning

The process of managing your money to achieve personal economic satisfaction.

Deficit

A deficiency or lack of something.

Personal Financial Statement

A document that provides information about an individual's current financial position and presents a summary of income and spending.

Liabilities

A financial obligation of a business that it is required to repay in the future.

Insolvency

A financial state that occurs if liabilities are greater than assets.

Liquidity

A measure of the ease with which an asset can be converted into money without a significant loss of value.

Consumer

A person who purchases goods and services for personal use.

Budget

A plan for making and spending money.

Surplus

A situation in which quantity supplied is greater than quantity demanded.

Money Management

Planning how to get the most from your money.

Liquid Assets

Resources such as cash that are easily converted into other assets or used to pay for goods, services, or liabilities.

Budget Variance

The difference between the budgeted amount and the actual amount that you spend.

Cash Flow

The net income generated by a property before depreciation and other non-cash expenses.

Personal Balance Sheet

a financial statement that lists items of value owned, debts owed, and a person's net worth