Chapter 1: Introduction to Personal Finance
Save $500 for an emergency fund.
What is The First Foundation?
How often you create a budget.
What is done monthly?
Pay cash for your car.
What is The Third Foundation?
Get out of debt and stay out of debt.
What is The Second Foundation?
Build wealth and give.
What is The Fifth Foundation?
20% and 80%.
What percent of personal finance is head knowledge, and what percentage is behavior?
When your income minus your giving, saving, and spending equals.
Money added to a principal earned at a fixed rate.
What is compound interest?
Your greatest wealth-building tool.
What is your income?
A pool of money that will be invested in a mix of stocks, bonds, and money market accounts.
What is a mutual fund?
When your assets total more than your liabilities.
What is a positive net worth?
Food, utilities, shelter, and transportation.
What are the Four Walls?
The principle that says that a certain amount of money today is worth more than the same amount in the future.
What is the time value of money?
This method involves paying off your debts from smallest to largest.
What is the debt snowball method?
The amount of money returned to you on your initial investment.
What is ROI (Return on Investment)?
Intended to promote economic recovery and social reform, this is a policy Franklin D. Roosevelt passed in the 1930s because of the Great Depression.
What is the New Deal?
The money you make based on the percentage of total sales.
What is commission?
The principle which says, "Anything that can go wrong will go wrong."
What is Murphy's Law?
An asset that goes down in value.
What is a depreciating asset?
The three components of compound growth.
What is money, time, and rate of return?
In 1972, this association made borrowing money to attend college much easier than it previously had been.
What is the Student Loan Marketing Association (SLAM)?
A cost that is not essential for the operation of a home or a business.
What is a discretionary expense?
Is it unexpected? Is it necessary? Is it urgent?
What are the three questions you ask yourself before spending money from your emergency fund?
These types of loans require the borrower to put up collateral for the loan.
What are secured loans?
A retirement plan where you invest your money after paying taxes, and the investment grows tax-free
What is a Roth IRA?