Budget boss
This is the term for money set aside for unexpected expenses
what is an emergency fund
This is a three digit number that measures your creditworthiness
what is credit score
a plastic card that lets you borrow money but can hurt you
what is a credit card
This represents ownership in a company and can pay dividends.
what is stock
This is the money a company earns after subtracting expenses from revenue
what is Profit
This is a type of expense that stays the same each month
what is fixed expense
This is a type of loan that secures property (often a house)
what is a mortgage
type of account for everyday transactions
what is a checking account
This type of investment is essentially a loan to a company or government, repaid with interest
what is a bond
The financial statement that shows the company's revenues, expenses and net income over a period of time
what is the income statement
This budgeting splits income into 50% needs, 30% wants and 10% saving's
what is 50/30/20 rules
this ratio compares monthly debt payments to monthly income and lenders use it to assess risk
A Roth IRA allows you to withdraw money tax-free at this stage of life
what is retirement
This type of fund pools money from many investors to buy a diversified portfolio of stocks and bonds
mutual fund
This financial statement shows a company's assets, liabilities and equity at a specific point in time.
what is the balance sheet
The financial strategy involves paying off debt starting with the smallest balance first
what is the snowball method
this annual percentage includes both interest and fees, giving the true cost of borrowing
what is APR- Annual percentage rate
This gov agency insures bank deposits up to $250,000 per depoister, per bank
what is the FCIC- Federal Deposit Insurance Corporation
This index tracks 500 large US companies and is often used as a benchmark for the stock market
what is the S&P 500
this measure of profitability is calculated as net income divided by shareholder equity
what is return on equity
if your monthly net income is $3,500 and your fixed expenses are $2,00, what percentage of your income is fixed?
57.14%
(fixed/net)*100= 2000/3500*10%=0.5714
This credit scoring model, developed by Fair Isaac Corporation is widely used in the US
what is FICO scores
The financial principle suggests that the value of money today is worth more than the same amount in the future
what is the time value of money
The Nobel Prize winning theory suggest markets reflect all available information, making it hard to "beat" them
What is the efficient market hypothesis- passive/active investors
This weighted measures reflects the average cost of equity and debt financing for a company
what is WACC- Weighted average cost of capital