Unit 1 Part A- Why Save Money?
Money Management
Day-to-day financial activities necessary to manage current personal economic resources while working toward long-term financial security.
Long-term Liabilities
Debts that are not required to be paid in full until more than a year from now.
Current Liabilities
Debts that must be paid within a short time, usually less than a year.
Balance Sheet
A financial statement that reports what an individual or a family owns and owes; also called a net worth statement.
Cash Flow Statement
A financial statement that summarizes cash receipts and payments for a given period.
Financial Plan
A formalized report that summarizes your current financial situation, analyzes your financial news, and recommends future financial activites
Safe Deposit Box
A private storage area at a financial institution with maximum security for valuables.
Inflation
A rise in the general level of prices
Budget
A specific plan for spending income.
Liabilities
Amounts owed to others.
Liquid Assets
Cash and items of value that can easily be converted to cash.
Assets
Cash and other property with a monetary value.
Take-home Pay
Earnings after deductions for taxes and other items; also called " disposable income."
Values
Ideas and principles that a person considers correct, desirable, and important
Time Value of Money
Increases in an amount of money as a result of interest earned
Income
Inflows of cash to an individual or a household.
Discretionary Income
Money left over after paying for housing, food, and other necessities.
Liquidity
The ability to readily convert financial resources into cash without a loss in value
Cash Flow
The actual inflow and outflow of cash during a given time period.
Deficit
The amount by which actual spending exceeds planned spending.
Surplus
The amount by which actual spending is less than planned spending.
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 a 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
Budget Variance
The difference between the amount budgeted and the actual amount received or spent.
Net Worth
The difference between total assets and total liabilities.
Insolvency
The inability to pay debts when they are due because liabilities far exceed the value of assets.
Bankruptcy
The legal status of a person who is not able to pay debts owed
Personal Financial Planning
The process of manning your money to achieve personal economic satisfaction
Adult Life Cycle
The stages in the family stiuation 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