Intro. to Personal Finance
What is Personal Finance?
The persistent increase in the cost of goods and services or the persistent decline in the purchasing power of money.
What is Inflation?
Series of envelopes that are divided into categories (food, entertainment, gas, etc.) and are used to store cash for planned monthly expenses.
What is the Envelope System?
A debt evidenced by a "note" which specifies the principal amount, interest rate, and date of repayment.
What is a Loan?
Save a $500 Emergency Fund.
What is the First Foundation?
In this level of financial well-being people are living paycheck to paycheck.
What is Survival?
This is the key ingredient when it comes to wealth building.
What is Discipline?
A copy of each check you write.
What is a Carbon Check?
Interest paid on interest previously earned.
What is Compound Interest?
Build Wealth and Give!
What is the Fifth Foundation?
In this level of financial well-being you are moving toward financial security and have some money left after bills.
What is Comfort?
A savings account that is set aside to be used only for emergency expenses.
What is an Emergency Fund?
Occurs when money is withdrawn from a bank account and the available balance goes below zero.
What is an Overdraft?
The granting of a loan and the creation of a debt, any form of deferred payment.
What is Credit?
Pay Cash for Your Car!
What is the Third Foundation?
The knowledge and skill-set necessary to be an informed consumer and manage finances effectively.
What is Financial Literacy?
A rate which is either charged (on debt) or paid (on investment accounts) for the use of money.
What is the Interest Rate?
A written cash flow plan.
What is a Budget?
Saving money over time for a large purchase.
What is a Sinking Fund?
Pay Cash for College!
What is the Fourth Foundation?
A system by which goods and services are produced and distributed.
What is the Economy?
An emergency fund, large purchases, and wealth building are the three reasons to do this with money.
What is Save?
A cash flow plan that assigns an expense to every dollar of your income, wherein the total income minus the total expenses equals zero.
What is a Zero-Based Budget?
A fee paid by a borrower to the lender for the use of borrowed money.
What is Interest?
Get Out of Debt and Stay Out!
What is the Second Foundation?
At this level of financial well-being your money works for you.
What is Secure?
When evaluating this you must consider both inflation and interest earned.
What is the Time Value of Money?
The act of matching your bank statement with your checkbook.
A person or organization that buys/uses goods or services.
What is a Consumer?
When you buy something without budgeting or doing any research.
What is an Impulse Purchase?
To be "money smart", you need to know the 'language of money', how to manage your 'behavior' with money, and what third thing.
What is Basic Math?
An account that generates interest income on the available balance in the account.
What is an Interest-Bearing Account?
A summary that shows total income and spending for a given time period.
What is a Cash Flow Statement?
An obligation of repayment owed by one party (debtor/borrower) to a second party (creditor/lender).
What is Debt?
Losing Freedom, Being abused by "no" , not working, and Fear of what they find are all what according to Dave Ramsey.
What are Reasons People Do Not Budget?