Financial Health and Budgeting Flashcards
Grade 12 · Health · Flashcards
Essential personal finance terms covering budgeting, debt, credit, savings, and investment fundamentals.
Flashcards
- Gross income
- Total earnings before any taxes, insurance, or other deductions are taken out.
- Net income
- Take-home pay after all deductions; the amount actually available to budget and spend.
- Fixed expense
- A recurring cost that stays the same each month, such as rent, car payments, or insurance premiums.
- Variable expense
- A cost that changes month to month, such as groceries, utilities, or entertainment spending.
- Discretionary income
- Money remaining after paying taxes and essential living expenses; available for saving, investing, or non-essential spending.
- Interest rate vs. APR
- The interest rate is the cost of borrowing principal only; APR includes fees and other costs, making it a more complete picture of loan cost.
- Amortization
- The process of paying off a loan with scheduled principal and interest payments over time; early payments go mostly to interest.
- Credit utilization ratio
- The percentage of available revolving credit in use; keeping it below 30% supports a healthy credit score.
- Opportunity cost
- The value of the next-best alternative given up when making a financial decision; every dollar spent has an implicit opportunity cost.
- Inflation
- The rate at which the general price level of goods and services rises over time, eroding purchasing power of savings not invested.
- Dollar-cost averaging
- Investing a fixed amount at regular intervals regardless of market price, reducing the impact of volatility over time.
- Liquidity
- How quickly and easily an asset can be converted to cash without significant loss of value; cash and savings accounts are highly liquid.
- Vesting schedule
- The timeline under which an employer's 401(k) matching contributions become fully owned by the employee; leaving before full vesting means losing some employer contributions.
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