Chapter 1: Personal Financial Overview Flashcards
(28 cards)
Helps you reach important goals and financial security over your lifetime
Financial Planning
The ability to meet essential needs without taking on more debt than you can repay
Financial Security
Possessing and applying financial knowledge to make informed and responsible financial choices
Financial Literacy
Using your resources to achieve predetermined objectives
Management
Tangible items that can be purchased
Goods
Intangible activities that another person usually performs for a fee
Services
Things that are considered necessities
Needs
Things you would like but they are not essential
Wants
Your beliefs about what is important and desirable
Values
The overall structure of values and goals that guides your behavior
Value System
The moral principles or beliefs that direct a person’s behavior
Ethics
An objective you want to attain
Goal
A value or goal that is given more importance than other values and goals
Priority
An established measure of quality, value, or quantity
Standard
Tools you can use to reach goals
Resources
Weighing the costs against the benefits of an action, purchase or financial decision
Cost-benefit analysis
The change in total benefit of using one additional unit
Marginal benefit
The change in total cost of using one more unit
Marginal cost
The choice you give up when you make one choice over another
Trade-off
The value of the option you gave up
Opportunity cost
A process of choosing a course of action after evaluating information and the costs and benefits of alternative actions
Systematic decision-making
The state of the economy at a given time
Economic conditions
Period of slow or no economic growth
Recession
Period of rising prices
Inflation
