Basics of Personal Finance
This type of account is where your paycheck usually lands and is used for day‑to‑day spending.
What is a checking account?
This type of IRA lets your contributions potentially reduce your taxable income in the year you make them.
What is a Traditional IRA?
This contribution from your employer is essentially “free money” added to your 401(k) when you contribute.
What is an employer match?
This term refers to the amount you pay out of pocket before your insurance begins to cover expenses.
What is a deductible?
Someone who recently began earning significantly more money than before is said to have experienced this — and is a strong candidate for professional financial guidance.
Someone who just had a jump in income?
This term describes money you set aside for unexpected expenses—usually 3–6 months of living costs.
What is an emergency fund?
This post‑tax IRA allows your money to grow tax‑free and be withdrawn tax‑free in retirement.
What is a Roth IRA?
This type of 401(k) contribution is made with after‑tax dollars and allows tax‑free withdrawals in retirement.
What is a Roth 401(k)?
This government agency protects consumers and ensures the safety of banks and deposits up to $250,000 per depositor, per institution.
What is the FDIC?
A person receiving this type of unexpected financial windfall — from inheritance to stock compensation — often needs help understanding tax implications, investing, and planning.
Someone who just had a financial windfall or inheritance?
This number, often between 300 and 850, reflects your reliability as a borrower and influences loan interest rates.
What is a credit score?
This is the age at which you can begin taking penalty‑free withdrawals from an IRA.
What is age 59½?
This rule allows employees aged 50 or older to save additional amounts into their 401(k) beyond the standard contribution limit.
What are catch‑up contributions?
This number measures the general increase in prices over time, reducing the purchasing power of your money.
What is inflation?
Clients who feel this way about their current advisor — disengaged, underserved, or “only contacted at review time” — are prime candidates to be referred for a second opinion.
What is dissatisfied or under-advised investor?
This financial principle states that the longer you keep your money invested, the more time it has to grow—making time one of the most powerful factors in building wealth.
What is the time value of money?
These mandatory annual withdrawals begin at a certain age for Traditional IRAs but not for Roth IRAs.
What are Required Minimum Distributions (RMDs)?
This IRS rule allows you to take penalty‑free withdrawals from a 401(k) if you leave your employer in the year you turn 55 or later—an exception that does not apply to IRAs.
What is the Rule of 55?
This term describes the total value of your assets minus the total of your liabilities.
What is net worth?
This trait describes an ideal referral: someone proactive, coachable, and open to professional guidance — making them more likely to follow recommendations and build a long-term relationship.
What is being financially coachable (or growth‑minded)?
Named after a type of budgeting system, this method assigns every dollar a specific purpose so your income minus expenses always equals zero.
What is zero‑based budgeting?
This income‑based method allows you to fund a Roth IRA by contributing to a Traditional IRA and then converting it, often used by high‑income earners.
What is a backdoor Roth IRA?
This strategy allows high‑income earners to save far beyond the normal salary‑deferral limits by making after‑tax contributions to a 401(k) and then converting them to Roth dollars, often involving in‑plan or in‑service rollovers.
What is the Mega Backdoor Roth?
This economic indicator tracks the total value of goods and services produced within a country’s borders and is a key measure of national economic performance.
What is Gross Domestic Product (GDP)?
This type of individual is often overlooked as a referral opportunity, yet they face complex decisions about pensions, Social Security timing, healthcare, and income distribution as they approach this major milestone.
Who is someone within 5–10 years of retirement?