Key Terms
a person or organization that uses a product or service
Consumer
The persistent rise in the cost of goods and services over time
Inflation
The increase in value of a home over time; the difference between the amount owed and what the home could be sold for
Equity
What is the first Foundation?
Save $500 for your emergency fund.
An asset that loses value over time, such as a car that’s worth less every year
Depreciating Asset
Tthe granting of a loan and the creation of debt; any form of deferred payment
Credit
A record that summarizes all of the income and outgo (spending) over a certain time period
Cash-Flow Statement
The amount of interest charged on a debt, but not yet collected; interest accumulates from the date a loan is issued
Accrued Interest
What is the second foundation?
Get out and stay out of debt.
Anything that is owned by an individual, including money in the bank or investments
Assets
The additional cost a lender charges for borrowing their money
Interest
a cash-flow plan that assigns an expense to every dollar of your income; the goal is for the total income minus the total expenses to equal zero
Zero Based Budget
What is the third foundation?
Pay Cash for your car.
A savings account set up specifically to be used to cover financial emergencies
Emergency Fund
What is the Fifth foundation?
Build Wealth and give.
A written plan for giving, saving, and spending
Budget
____ % of Americans have $0—yes, zero—saved.
14
The dollar value of a person’s liabilities is larger than the value of their assets
Negative Net Worth
What is the fourth foundation?
Pay Cash for College.
The amount by which the value of a person’s assets exceeds or falls behind the value of their liabilities
Net Worth
Expense that remains the same from month to month
Fixed Expense
The average rate of growth for an investment over time; often expressed as an annual figure
Compound Growth
The average American household spends more than ____ % of their annual income.8
90
Name one of 5 different ways you can save $500.
Sell Stuff, Find a job, Start a Biz, Earn Cash, Teach, Tutor
Expense that occurs at various times throughout the year and tends to be in large, lump sums
Intermittent Expense