1. FINANCIAL RESPONSIBILITY AND DECISION MAKING 

assets

items owned that could be sold for cash

criteria

rules for evaluating something

financial

anything that has to do with money and investments

goal

target or result which is desired

liabilities

money owed

literacy

an individual's knowledge of a certain area or field

long-term goal

a desired result which may be attained in more than one year

misconception

a misunderstanding; a mistaken thought or idea

net worth

the amount you have, minus the amount you owe

relevant

appropriate, suitable, fitting

reliable

trustworthy, information you can trust with certainty

responsible

accountable, reliable, dependable

short-term goal

a desired result which may be attained in less than one year

warranty

a written guarantee given to the purchaser, usually specifying that the manufacturer will make any repairs or replace defective parts free of charge for a certain period of time

Unit: 2. MONEY MANAGEMENT 

account verification

a process where banks check your history to make sure you will be a responsible account holder

bank

a business and financial institution; a safe place to keep your money

beneficiary

a person who receives the payment from a life insurance policy

bodily injury limit

the most the insurance company will pay

budget

a plan for how you will spend and save your money

checkbook register

a booklet used to track deposits and withdrawals from a checking account

claim

a request for payment from an insurance company

co-payment

an amount the insured person pays to cover a portion of a doctor bill or cost for prescription

consumer rights

laws that protect people who make purchases

credit union

a nonprofit financial institution formed by a large corporation or organization for their employees and members

debit card

a card that can be used to pay for products and services or be used at an ATM; similar to a credit card, but the payment amount is subtracted directly from an account

deductable

the amount an individual has to pay when they make a claim, with the remaining cost covered by the insurance company

deposit account

a bank account that lets you add money to the account

financial institution

a public or private organization that collects and invests money and offers financial services

fixed expenses

costs that remain the same amount

identity theft

a crime; stealing an individual's personal information in order to gain from their finances

impulse purchases

purchases that are not planned purchases

insurance policy

an agreement to cover or reimburse an individual for a loss that occurs

liability coverage

insurance that covers injury or loss to other people for which you are responsible

money order

an order for the payment of a certain amount of money; resembles a check and is typically used to pay a bill

payee

the person or company that you are writing a check to

phishing

requesting confidential information over the Internet under false pretenses in order to fraudulently obtain credit card numbers, passwords, or other personal data

premium

the amount to be paid by the policyholder for insurance

property coverage

insurance that covers the contents of your home such as furniture, television, bikes, appliances, and clothing

savings and loan

a financial institution that specializes in home loans

scam

a fraudulent scheme used to make money

spreadsheet

software that contains rows and columns used to make calculations, organize information, and make comparisons

stop payment

a request by an account holder to the bank not to pay a specific payment

variable expenses

costs that change in amount

3. SAVING AND INVESTING 

401(k)

a retirement plan that some private corporations offer their employees

403(b)

a retirement plan available to employees of nonprofit organizations, such as schools and hospitals

529 plan

a saving plan for education designed to help set aside funds to pay for future college costs

Annual Percentage Yield

(APY); the amount of interest you will earn in one year from a savings account

CD

certificate of deposit; an account where you leave your money for a set period of time and are unable to make deposits or withdrawals during this time unless you pay penalties

club account

an account used to save money for a special reason, such as a holiday, a vacation, or college

compound interest

the interest the bank gives on the interest that has been already earned

diversification

investing in a variety of investments to limit losses in the event of a sharp decline in a particular type of investment

fund manager

the professional who decides where to invest money in a mutual fund

IDA

individual development account; a matched savings accounts; an organization, such as a foundation, corporation, or government agrees to add money to the account to match the money you deposit

interest thresholds

the minimum balances before the bank begins paying interest

investing

using your money to try to make more money

IRA

a retirement account that lets you save and invest money tax-free until you withdraw it when you retire

liquidity

how easy it is to turn an investment into cash without losing its value

mature

when a savings product has been saved for the full term and reaches its full value; becoming payable or due

money market account

a savings account that offers a higher rate of interest when you make large deposits

mutual funds

a collection of money from a group of investors used to buy different investments, like stocks, bonds, and real estate. The fund is managed by professionals

opportunity costs

the difference between a chosen investment and one that is passed up

P/E

price-to-earnings ratio; the latest closing price divided by the earnings per share

portfolio

a list of investments held by an investor

principal

the original amount of money deposited in a savings account or invested

rate of return

a percentage that shows how much gain or loss an investment makes

retirement account

a plan for setting aside money to be spent after retirement

return

the profit or gain from saving or investing money

Rule of 72

a formula that helps you calculate how long it will take for your savings to double in value

savings bond

a savings product; a certificate issued by the U.S. government with values ranging from $50 to $10,000

share

a single unit or equal part

shareholder

a person who owns shares of a company’s stock

stock

a certificate representing a share of ownership in a company

stock broker

a professional who buys and sells stocks and other investments for customers

stock market

an organized way for people to buy and sell stocks and for corporations to raise money, The New York Stock Exchange and NASDAQ are the biggest in the United States

stock quote

the prices of a stock at a particular point during the day

stock symbol

a unique set of letters assigned to a company for the stock market

term

a set period of time

trade

to buy or sell stock

Treasury bills

T-bills; a savings product sold by the U.S. Treasury Department at a discount from their face value and range in terms from a few days to six months

Treasury Inflation-Protected Securities

TIPS; this savings product pays interest twice per year and provides protection against inflation

Treasury notes

T-notes; this savings product pays interest every six months and are issued in terms of two, three, five, and ten years

U.S. department of Treasury

an executive department of the United States government whose purpose is to manage the government’s money

variable interest rates

different interest rates are paid for different size balances, with higher balances earning higher rates

Unit: 4. CREDIT, DEBT, AND CONSUMER SKILLS 

advertising

the practice of calling public attention to one's product or service by paying for announcements in newspapers and magazines, over radio or television, on billboards, on the Internet, or in other places

APR

Annual Percentage Rate; the yearly interest rate a credit card company charges to borrow money

ARM

Adjustable Rate Mortgage; a mortgage that has a fixed rate for a certain amount of time and then has a variable rate that changes periodically

balloon mortgage

a short-term mortgage in which small payments are made until the completion of the term, at which time the entire balance is due

bankruptcy

legal statement that an individual is unable to pay lenders; it involves a court process that protects people while they repay debts or the court removes the debts

Better Business Bureau

an organization whose purpose is to receive and investigate customer complaints of dishonest business practices and provide complaints and reports from investigations to the public

capacity

the ability to make payments based on amount of income and other bills

capital

your net worth; the value of the items you own and the cash you have

cash advance

cash borrowed from a credit card account; credit card companies typically charge fees and higher interest rates for cash advances

character

how responsible you have been in the past with credit; information from your credit report

collateral

a piece of property that a person promises to give the lender if a loan is not paid

consumer

any individual who uses or owns goods or services

consumer rights

laws and regulations that protect consumers when buying products or services

co-signer

a person who signs a loan with another individual

credit limit

maximum amount of money that an individual is authorized to use

credit report

a report prepared by a credit bureau which shows details of an individual’s credit history; it is used by a lender to determine if an individual is creditworthy

credit score

a number that lenders look at to see if an individual is creditworthy; it is also called a FICO score

creditworthy

having an acceptable credit rating; considered responsible to borrow money

debt

an amount of money that is owed to a bank, a credit card company, a store, or another individual

debt-to-income ratio

the amount of debt compared to income; a ratio used to determine if you have too much debt

escrow

an account with a financial institution used to pay taxes and insurance

FAFSA

Free Application for Federal Student Aid; an application to obtain financial aid, such as grants or student loans

FHA loan

a government-backed loan, which makes it easier for some people to qualify

finance charges

interest and fees charged for making purchases using a credit card

financial aid

money used to support students with the costs of higher education

fixed rate

an interest rate that remains the same through the entire loan repayment period

foreclosure

process in which a lender tries to regain property because the borrower has not made payments

garnishment

a process when a lender tries to obtain money from an individual’s employer to pay an unpaid debt

grace period

a period of time before the credit card company starts charging interest

grants

money awarded to a variety of students that does not need to be repaid

home equity

the value invested in a home; the amount owed for the home subtracted from the total value of the home

installment loan

a loan that is repaid in equal monthly payments for a specific period of time

inquiry

a request for a person’s credit report

installments

equal payments usually made over several years

lease

to give temporary possession to another individual

lease

a contract to lend property to another for a specific amount of time and for a certain price

lender

the bank or company that lends money on the condition that it will be paid back

lien

a claim to take and hold property until a debt is paid

loan repayment period

the time it will take to repay the loan

minimum payment

the least amount of money that must be paid at the end of a month

mortgage

a loan used to buy a home

periodic rate

the interest rate you are charged for one payment period; this rate is usually the APR divided by 12

PMI

Private Mortgage Insurance; insurance you need to pay on most loans when you make a down payment of less than 20 percent

previous balance

the amount you owed at the end of the previous billing period

property manager

the person in charge of renting an apartment or other rental property; sometimes called a landlord

rent

to take possession of and use property by paying a set amount

repossession

seizing the collateral or item that secured the loan when the debt has not been paid

scholarship

money for college that does not need to be repaid; offered to students who satisfy a certain criteria

secured loans

a loan where the individual offers collateral; if the loan is not paid back as agreed, the individual gives up the collateral to the lender

service credit

a type of credit or promise to pay for services, such as phone, electricity, and water

subprime lending

loans with very high interest rates

title

a certificate that indicates who owns the car

Truth in Lending Disclosure

the statement that federal law requires a credit card company provide to explain their terms

unsecured loans

a loan where the individual does not offer collateral; sometimes called personal or signature loans

VA loan

a government-backed loan for veterans

variable rate

an interest rate that may change during the repayment period

warranty

a written guarantee given to the purchaser of a new appliance, automobile, or other item by the manufacturer or seller, usually specifying that the manufacturer will make any repairs or replace defective parts free of charge for a stated period of time