About this Flash Card Set
16 Cards
by daniel_carter
Master the core personal-finance vocabulary: budgeting, credit, interest, investing, and retirement accounts. Plain-English definitions of the terms that show up in real financial decisions.
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Budget
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A plan for how you'll spend and save your money over a period of time, matching income against expenses.
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Emergency fund
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Savings set aside for unexpected costs (job loss, car repair, medical bills). A common target is 3–6 months of expenses.
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Gross vs. net income
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Gross income is your pay before deductions; net income (take-home pay) is what's left after taxes, insurance, and other withholdings.
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Compound interest
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Interest earned on both your original principal AND the interest already added. It's why investing early matters — growth accelerates over time.
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APR (Annual Percentage Rate)
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The yearly cost of borrowing, including interest and certain fees, shown as a percentage. Lower APR = cheaper debt.
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Credit score
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A number (commonly 300–850) that predicts how likely you are to repay debt. Higher scores unlock lower interest rates.
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Credit utilization
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The share of your available credit you're using. Keeping it below ~30% helps your credit score.
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Principal
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The original amount of money borrowed or invested, before interest.
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Diversification
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Spreading investments across different assets so a loss in one doesn't sink your whole portfolio. 'Don't put all your eggs in one basket.'
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Asset vs. liability
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An asset puts money in your pocket or holds value (savings, investments, a home); a liability takes money out (loans, credit-card debt).
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401(k)
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An employer-sponsored retirement account you fund with pre-tax dollars; many employers match contributions (free money).
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Roth IRA
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A retirement account funded with after-tax dollars; qualified withdrawals in retirement are tax-free.
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Inflation
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The gradual rise in prices over time, which reduces the purchasing power of money. Investing aims to outpace it.
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Net worth
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What you own minus what you owe (total assets − total liabilities). A snapshot of your overall financial health.
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Fixed vs. variable expense
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Fixed expenses stay the same each month (rent, car payment); variable expenses change (groceries, gas, entertainment).
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Interest (earned vs. paid)
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Interest you EARN is money paid to you for saving/investing; interest you PAY is the cost of borrowing. Aim to earn more than you pay.
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