Unit 2 Vocab Flashcards
The standard Internal Revenue Service (IRS) form that individuals can use to file their annual income tax returns
1040
A budgeting method that allocates 50% to needs, 30% to wants, and 20% to savings and debt repayment
50/30/20
A home loan with an interest rate that changes periodically
Adjustable Rate Mortgage
An inspection of a filer’s tax return by the IRS
Audit
A type of auto financing that allows you to “rent” a car from a dealership for a certain length of time and amount of miles. Once the time period ends, you either return the car or purchase the car if that is an option in your contract.
Auto Lease
A plan of your expected income and how you will use it to meet your expected expenses over a period of time
Budget
The amount of money needed to sustain a certain level of living, including basic expenses such as housing, food, taxes, and healthcare; often used when comparing how expensive it is to live in one city versus another
Cost of Living
When your expenses exceed your income
Deficit
Someone you financially support who can be “claimed” on a tax return to reduce your taxable income and lower your taxes
Dependent
Measures the value an asset loses over time
Depreciation
Non-essential spending on goods and services that are not required to maintain basic living standards
Discretionary Expense
A portion of the total cost of an item, such as a car or house, that must be paid at the time of purchase. The buyer will often take out a loan to finance the remaining balance.
Down Payment
A cost that can be expected at regular intervals and that remains the same amount (e.g., monthly rent payment)
Fixed Expense
A home loan option with a specific interest rate for the entire term of the loan
Fixed Rate Mortgage
Total earnings before any deductions are taken
Gross Income/Gross Pay
