Personal finance chapter 1

Consumer
A person or organization that uses the product or service
Credit
The granting of the loan in the creation of debt any form of a deferred payment
Debt
And obligation every payment owed by one party to a second party in most cases this includes repayment of the original amount plus interest
Economy
A system by which goods and services are produced and distributed
Financial literacy
The knowledge and skill set necessary to be an informed consumer and manage finances effectively
Interest
A fee paid by a borrower to the lender for the use of borrowed money typically interest is calculated as a percent of the principal
Loan
A debt evidenced by am though which specifies the principal about interest-rate and debt of repayment
Personal-finance
All of the decisions and activities of an individual or family regarding their money including spending saving budgeting etc.
Four key components of financial planning
Know your money
replace money myths with money truths
Know your financial situation
set money goals
Three key components to becoming money smart
First you need to be comfortable with basic math
Second you must start learning the language of money
Third you need to learn how to manage your behavior with money
Assets
Anything you own that has value
Liabilities
Something you owe; money that is owed
List some mistakes that Americans often make when it comes to money
Buying things They can’t afford
Don’t plan for retirement
Don’t make a budget
Use debt as a financial tool
Don’t save for an emergency fund
Explain how marketing can affect your decisions when it comes to spending money
They encourage you to go into debt and buying things we can’t afford (buy now pay later) (90 days same as cash)
Personal finance is ____ _______ and ____ ____ _______
80% behavior ; 20% head knowledge
Money ____ is easy – it’s controlling your _______ that’s the real challenge
Math ; behavior