Vocab

Question 1

Spending more money than available in an account

Answer 1

Overdraft

Question 2

Spreading investments to reduce risk

Answer 2

Diversification

Question 3

A retirement savings plan with tax benefits

Answer 3

Individual Retirement Account (IRA)

Question 4

The idea that money today is worth more than the same amount in the future

Answer 4

Time Value of Money

Question 5

Money left after necessities and fixed expenses

Answer 5

Discretionary Income

Question 6

A credit line that allows borrowing up to a limit

Answer 6

Revolving Credit

Question 7

A loan repaid in regular payments over time

Answer 7

Installment Loan

Question 8

The lowest amount that must be paid on a credit card bill

Answer 8

Minimum Payment

Question 9

The amount paid out-of-pocket before insurance covers the rest

Answer 9

Deductible

Question 10

The value of a person’s assets minus liabilities

Answer 10

Net Worth

Question 11

A numerical rating of a person’s creditworthiness

Answer 11

Credit Score

Question 12

The yearly cost of borrowing money, including interest

Answer 12

Annual Percentage Rate (APR)

Question 13

The value of the next best alternative foregone

Answer 13

Opportunity Cost

Question 14

An employer-sponsored retirement savings plan

Answer 14

401(k) Plan

Question 15

Insurance that covers damages or injuries caused to others

Answer 15

Liability Coverage

Question 16

Total earnings before deductions

Answer 16

Gross Income

Question 17

A tax system where higher income earners pay a higher percentage

Answer 17

Progressive Tax

Question 18

Earnings after taxes and deductions

Answer 18

Net Income

Question 19

Ownership in a company

Answer 19

Stock

Question 20

Profit from selling an investment for more than its purchase price

Answer 20

Capital Gain

Question 21

A measure of how much debt a person has compared to their income

Answer 21

Debt-to-Income Ratio

Question 22

Insures bank deposits up to a certain amount

Answer 22

Federal Deposit Insurance Corporation (FDIC)

Question 23

The amount paid for insurance coverage

Answer 23

Premium

Question 24

Evaluating products to find the best quality and price

Answer 24

Comparison Shopping

Question 25

The difference between income and expenses

Answer 25

Net Cash Flow

Question 26

Purchasing without planning or consideration

Answer 26

Impulse Buying

Question 27

The trade-off between potential risk and potential gain in financial decisions

Answer 27

Risk vs. Return

Question 28

How quickly an asset can be converted into cash

Answer 28

Liquidity

Question 29

The rate at which the general level of prices for goods and services rises

Answer 29

Inflation

Question 30

A plan for income and expenses over a specific period

Answer 30

Budget

Question 31

Taxes for social security and medicare

Answer 31

Federal Income Contributions Act (FICA)

Question 32

A tax form showing annual earnings and taxes paid

Answer 32

W-2 Form

Question 33

Savings set aside for unexpected expenses

Answer 33

Emergency Fund

Question 34

The cost per unit of product

Answer 34

Unit Price

Question 35

A legal process for those unable to repay debts

Answer 35

Bankruptcy

Question 36

A bank account used for saving money with interest

Answer 36

Savings Account

Question 37

A guarantee from a seller regarding a product's condition

Answer 37

Warranty

Question 38

Laws that safeguard buyers from fraud and unfair practices

Answer 38

Consumer Protection Laws

Question 39

A pooled investment for more than its purchase price

Answer 39

Mutual Fund

Question 40

Interest earned on both the principal and previously earned interest

Answer 40

Compound Interest

Question 41

A loan to a company or government that earns interest over time

Answer 41

Bond

Question 42

Costs that fluctuate monthly

Answer 42

Variable Expenses

Question 43

A type of credit score used by lenders

Answer 43

FICO Score

Question 44

A bank account used for everyday transactions

Answer 44

Checking Account

Question 45

Costs that do not change monthly

Answer 45

Fixed Expenses

Question 46

A tax form used by employees to determine tax withholding

Answer 46

W-4 Form