Personal Finance Ch. 1 Flashcards
Financial Plan
A set of goals for acquiring, saving, and spending money.
Financial Goals
Measurable objectives related to acquiring or spending money.
Needs
Things a person must have to survive, such as food, water, shelter, and clothing.
Wants
Things a person desires but are not necessary for survival.
Values
Your beliefs about ideas and principles that are important to you.
Wealth
A plentiful supply of money or valuable goods.
Net Worth
The difference between what you own and what you owe.
Assets
Things you own.
Liabilities
Debts you owe.
Investing
Putting money to a use that you hope will increase its value over time.
Financial Independence
Having enough money for your basic needs and modest wants without having to work.
Growth
Increase in value.
Average Rate of Return
The percentage that your savings or other investments earn over a period of time.
Interest
A fee paid on borrowed money or money earned on deposits with a bank or other financial institution.
Compound Interest
Earning Interest on the principal plus the interest you have already earned.
