Personal Finance Basics
Category in a budget for necessities
What are needs
For daily withdrawals and deposits – a place to keep money for the short term
What is a Checking Account
A payment card issued to users to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt.
What is a Credit Card
A federal program that provides retirement benefits and disability income to qualified people, as well as their spouses, children, and survivors. To qualify, workers must be at least 62 years old and have paid into the system for 10 years or more.
What is Social Security
The collection of exchanges and other venues where the buying, selling, and issuance of shares of publicly held companies take place.
What is the Stock Market
Money that you don’t spend
What are savings
An account to store money intended for large purchases and/or emergencies
What is a Savings Account
A payment card that can be used in place of cash to make purchases - the money must be in the cardholder's bank account at the time of a purchase and is immediately transferred directly from that account to the merchant's account to pay for the purchase.
What is a Debit Card
This retirement account is often set up through one’s employer, with some employers offering a contribution match.
What is a 401(k)
When the interest you earn on a balance in a savings or investing account is reinvested, earning you more interest.
What is Compound Interest
An estimate of income and expenditures for a period of time
What is a budget
Where the value of your contributions may grow through the power of compound interest.
What is an Investment Account
The lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The borrower incurs a debt and is usually liable to pay interest on that debt until it is repaid as well as to repay the principal amount borrowed.
What is a Loan
Allows individuals to direct pre-tax income toward investments that can grow tax-deferred. The IRS assesses no capital gains or dividend income taxes until the beneficiary makes a withdrawal.
What is a Traditional IRA
A security that represents the ownership of a fraction of a corporation.
What is a Stock
Net Worth equals
What is assets minus liabilities
A deposit account that pays interest based on current interest rates in the money markets.
What is a Money Market Account
A software application that you may access from your computer, tablet, or mobile device to track your personal finances.
What is a Budgeting/Personal Finance App
This retirement account allows one to withdraw funds tax-free, however taxes must be paid on contributions into the account.
What is a Roth IRA
This type of investment is a fixed-income instrument that represents a loan made by an investor to a borrower.
What is a Bond
Your income minus your expenses over a certain period of time
What is cash flow
A tax-advantaged investment vehicle in the United States designed to encourage saving for the future higher education expenses of a designated beneficiary.
What is a 529 Savings Plan
An agreement between you and a lender that allows you to borrow money to purchase or refinance a home and gives the lender the right to take your property if you fail to repay the money you've borrowed.
What is a Mortgage
Tax-advantaged account created for or by individuals covered under high-deductible health plans (HDHPs) to save for qualified medical expenses.
What is a Health Savings Account (HSA)
These types of securities can only be purchased once per day, and are purchased in dollar amounts as opposed to number of shares.
What are Mutual Funds