1-4 Personal Finance

Fixed costs

An expense that does not vary from one time period to another

APR

Abbreviation of annual percentage rate, the interest rate applied annually to a loan or credit card balance

APY

Abbreviation of annual percentage yield, the rate earned in the course of one whole year, taking compounding into account, expressed as a percentage

Cash reserves

Cash and other liquid assets such as demand deposits or treasury bills that an individual possesses

Savings

Money set aside for future use

Refinancing

To obtain a new loan for something on different terms, often involving the paying off of an existing high-interest loan by means of a new, lower-interest one

Budget

To plan the allocation, expenditure, or use of money

Withdraw

To take money out of an account

Cost of living

The amount of money spent on food, clothing, accommodation, and other basic necessities

Income potential

The amount of money that is anticipated to be received over a period of time, either as payment for work, goods, or services, or as a profit on capital