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Personal Finance Glossary Personal Finance 1040EZ tax form The basic tax form used by many people

e for filing their federal income taxes. An income tax form is also called a tax return. 1099 form A tax form similar to a W-2 form that is used by independent contractors, such as part-time freelance employees, lawyers, or accountants. 401(k) account A type of retirement savings account set up by employers for their employees. 529 plan A fund that allows parents to prepay or save for their children's future college expenses. There are two types of 529 plans: prepaid plans and savings plans. A prepaid 529 plan lets parents purchase college tuition at today's rates, with the guarantee that they'll be able to apply today's rates to college in the future, no matter how much they go up. A savings 529 plan is an investment account where money is set aside for college expenses. Accountant A finance professional who keeps track of a company or individual's money. Accountants are sometimes called auditors. Accounting The recording, reporting, and analyzing of financial information. Accounting equation See balance sheet equation. Accounting journal See ledger. Accounts payable A part of a companys liabilities. These are amounts of money owed to other companies for products. Accounts receivable Amounts of money that are owed to a company by customers. Accrual basis accounting The standard accounting type defined by GAAP. Active listening When you are fully engaged and participating as a listener. Adjustable interest rate See interest rate. Advertising When a company pays for messages that are meant to get consumers to notice and want its products. Affirmative Action A collection of policies that recruit and advance qualified minorities, women, people with disabilities, and veterans. Not all businesses use affirmative action. Affordable Care Act A law passed in the United States in March 2010. This law is intended to make health insurance more affordable and easier to get. Aggression Behavior that is intended to harm or cause pain to others. Aggression can be verbal or physical.

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Personal Finance Glossary Agricultural workers Workers in the farming industry. Alternative investments Investments other than the traditional categories of stocks, bonds, and cash. Alternative investments include things like real estate, annuities, lending, private equity, investment commodities, foreign exchange, collectibles, and social investing. Amendment A change thats made to the Constitution. Americans with Disabilities Act (ADA) An act that protects the rights of people with disabilities. Angel investor An investor or small group of investors who provide funding to a startup business in its very early stages. This often takes the form of a private equity investment. See also venture capital. Annual Once per year. Annual percentage rate (APR) An annual interest rate that doesnt take into account any compounding of interest that happened during that year. See also annual percentage yield. Annual percentage yield (APY) An annual interest rate that does take into account compounding of interest thats happened that year. See also annual percentage rate. Annuity An agreement you can make with an insurance company in which you pay the company a specific amount of money, and the insurance company agrees to pay you back a larger amount of money in regular payments in the future. See also straight annuity and installment-certain annuity. Appreciation When an equity investment increases in value. See also depreciation. APR See annual percentage rate (APR). APY See annual percentage yield (APY). Assets Your assets include money you have and things you own that are worth money. Assets also refers to things a company owns that are worth money. ATM See Automated Teller Machines (ATMs). Attitude A person's feelings and outlook about something. Audit See IRS audit. Auditor See accountant. Automated Teller Machines (ATMs) Machines that let you view your bank account information and add or remove money from your account.

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Personal Finance Glossary Back button A button in Firefox that lets you return to the last Web page you visited. See also Forward button. Bailout See government bailout. Balance See bank account and minimum balance. Balance sheet A sheet that shows how a companys financial position looks at a moment in time. It doesn't cover a time period. The balance sheet lists assets, liabilities, and owner equity. It also includes the balance sheet equation, which is Assets = Liabilities + Owner Equity. This equation is sometimes called the accounting equation. Balance sheet equation See balance sheet. Balancing a checkbook Tracking the transactions for a bank account in a checking register and completing the calculations to find out the balance of the account. Bank A financial company or organization that stores money for many people. It offers protection against loss or theft. Bank account A way to keep track of the money the bank is storing for you. The amount of money in a bank account is that bank accounts balance. See also savings account, checking account, and money market account. Bank account holder A person or company with a bank account. Banknote A paper bill or note produced by a bank that has a specific value in currency. See cash. Bank panic When bank runs happen on many banks at the same time. Bank run When many people want to take their money out of a bank, and the bank is unable to provide enough cash for all of them. A bank run is also called a run on a bank. Bankruptcy The inability to pay back creditors, to the extent that you file legal papers that put your finances under the supervision of the court system. See also declaring bankruptcy. Bargaining See negotiation. BBB See Better Business Bureau. Behavior The combination of things a person says and does. Being organized Having a reliable and efficient system for organizing your tasks and appointments. Being trustworthy Being a person that others can depend on.

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Personal Finance Glossary Beneficiary (of a life insurance policy) The person or group of people who will receive your life insurance money. Benefits (of a job) Health insurance, life insurance, retirement plans, or many other things that a company offers to help employees personally and financially. Benefits (of a product) The ways a product will improve your life by solving a problem or by making you feel good. See also features. Better Business Bureau An organization that reports on the reliability and ethics of companies and other organizations. Bias A prejudice or limit that damages the completeness and accuracy of the information a primary source or secondary source is providing. Bill of Rights The first ten amendments to the Constitution. Bills See invoice. Blank endorsement A type of endorsement that includes a signature on the back of a check without any special notes. Board of Governors The portion of the Federal Reserve System appointed by the government to oversee the work of the Fed. Bonds A type of debt investment in which you lend money to a company or a government, and the company or government gives you a document called a bond. The bond is a promise that the company or government will pay you back a specific amount on a specific date in the future, so you are promised a specific return on investment. Bonus A payment that's given to an employee above their normal salary or wages. Bookkeeping The recording of financial transactions. Branch In a bank, a branch is a local bank office you can visit. Break even point The point when a company makes enough money to pay for itself. Broker A finance professional who buys and sells stock and other securities on behalf of an investor. Budget A financial plan that shows what you plan to do with your money. Budgeting The act of creating a budget. Builder A worker who takes raw or manufactured goods and turns them into a finished structure, such as a house, boat, bridge, or skyscraper.

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Personal Finance Glossary Business An organization that provides commodities to consumers. A business may also be called a company, a firm, an enterprise, or a corporation. Buying in bulk Buying a large amount of a product at once in order to get a lower price. Buyout When a company buys another company. Capital Money or goods that are worth money. As a factor of production, capital is defined as the tangible goods of value that are created by labor. Services provided by labor are not categorized as capital. Capital only includes tangible material products created by humans. Capital gain When an investor makes money by selling an equity investment for more than the investor originally paid for it. Capital gains tax A federal tax that applies to investments and other personal property. The tax is calculated on the amount that the investment has increased in value. This tax is usually applied only when you sell the item, not while you own it. If the investment or property is owned for less than a year, it is a short-term capital gain and taxed along with regular income at the regular federal income tax rate. If the investment or property is owned for more than a year, it is a long-term capital gain and taxed at a lower rate. Capitalism A mixed economy system in which private individuals can own businesses and goods and in which production, consumption, and prices are determined mostly by competition in a free market. This is the system used in the U.S. It has more features of a market economy than a planned economy. The capitalist system in the U.S. has some government regulation, so prices, production, and consumption are not determined entirely by private producers and consumers. Capitalism is also called a free enterprise system or a private enterprise system. Capital loss When an investor loses money by selling an equity investment for less than the investor originally paid for it. Career aptitude A skill or ability that makes you a good fit for a particular job. Career aptitude test An exam that asks questions about activities you enjoy, skills you have, tasks you dislike, and many other things. It then uses this information to suggest a career or careers that might be a good fit for you. Career goal A job-related goal. It may define what kind of job you want, where you want to work, what kind of salary you want, or many other things. Car insurance Insurance that covers expenses for damage that you cause to others as a driver. Cash Money in the form of paper bills or coins, including banknotes.

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Personal Finance Glossary Cash basis accounting A form of accounting that records income when cash is received, and it records expenses when cash is paid out. Cash basis accounting does not meet GAAP standards. Cash flow The movement of money in and out of a business. Cash flow statement A statement that tracks the flow of cash in and out of the company. It focuses on cash instead of income. See also financing activities and investing activities. Cash manager The person at a company in charge of its process of collecting, investing, and managing cash. Cash reserve Money a company has in the bank. A cash reserve is sometimes called a rainy day fund because it is there just in case of emergencies. C corporation The standard, normal type of corporation. It protects the liability of its owners, but has the disadvantage of double taxation. See also S corporation. C: drive The name of the main hard drive on many computers. Centrally planned economy See planned economy. Checkbook A booklet containing checks and usually a checking register. Checking account A very common type of bank account intended to make it easy for you to make deposits and withdrawals. See also savings account. Checking register A printed set of pages included in a checkbook for you to keep track of transactions that affect your bank account. Checks Printed slips of paper that can be used to transfer money from one bank account to another. Checks are a feature of checking accounts. Chief financial officer (CFO) An official at a company who is responsible for its financial health. The CFO directs the company's budgets and financial goals. Childrens Health Insurance Program A program like Medicaid that provides services to children whose parents or guardians make to much money to be eligible for Medicaid, but do not have access to a private health care plan. Citation When you officially give credit to the person who created a work. You should always cite another person's work when you are using it. A list of works cited in a project can be called a reference page, a works cited page, or a bibliography. Citation is also called citing sources. Citizens The people living in a country are also called the citizens of that country.

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Personal Finance Glossary Claim An application or request sent to your insurance company, so you can receive your benefits. See also insurance adjustor. Classifieds A section in a newspaper or online where employers can post available jobs. Closed-end installment credit Credit that allows you to take possession of an expensive item and pay off the price of the item in a specific number of equal payments at regular intervals, such as monthly. See also installment credit. COBRA See Consolidated Omnibus Budget Reconciliation Act. Collateral An asset or group of assets that are linked to a loan. Command economy See planned economy. Commerce The buying and selling of products. See also domestic commerce. Commodities mutual fund A mutual fund that's specifically for investments in investment commodities such as livestock or energy sources. Commodity Something of value that can be bought, sold, or traded. A commodity is sometimes called a product. See also investment commodity. Comparison shopping Comparing products to find the lowest, fairest price. Competitive position The position a company holds in the industry compared to its competitors. Compounding See compound interest. Compound interest Interest that is added to the principal, so that the interest you receive starts to generate its own interest. This process is called compounding. See also simple interest. Compression The process of making something smaller by squishing or squeezing it. See also file compression (zip) utility and zipped file. Comptroller A finance professional who makes sure the financial records and reports of a business are accurate and complete. Conditional endorsement A type of endorsement that includes a signature on the back of a check and a description of a condition that must be true in order for the check to be cashed or deposited into your bank account. Conflict of interest A situation in which the employee could personally benefit by taking unfair advantage of his or her position within the company.

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Personal Finance Glossary Conformity The ability to change your attitudes, behaviors, and beliefs so that they match the expectations of those around you. Congress The House of Representatives and the Senate. Consolidated Omnibus Budget Reconciliation Act (COBRA) A federal government act that allows employees who lose their health insurance to continue participating in the insurance plan for a specific amount of time. Constitution In the United States, the Constitution is the supreme law that governs the country. Consumer Someone who buys or trades in order to receive a commodity. If you're buying something, you are a consumer. An economy is created by exchanges between producers and consumers. Consumer advocacy group An organization that works to protect consumer rights and helps consumers understand these rights. Consumer buying behavior The way individuals search for, choose, purchase, and use goods. Consumer credit Credit that is used by individual consumers. Consumer motives The reasons why people make specific choices in spending their money. A rational motive is a logical, practical motive for purchasing a product. Rational motives are often called functional motives. An emotional motive is a motive that's not based on a person's rational, practical thoughts. Instead, it's the result of a person's feelings or emotions. Emotional motives are often called psychological motives. Consumer Product Safety Commission (CPSC) A U.S. government agency with the purpose of "protecting the public from unreasonable risks of serious injury or death from thousands of types of consumer products." Consumer satisfaction When a consumer feels good about the price and quality of products he or she has purchased. Contract A written agreement that can be legally enforced. Contract job A job where you work for a specific amount of time or a specific task. When that time period is over or when the task is completed, the job ends. Contract to hire job A job where you will be hired on a contract at first, and if all goes well, you might later be hired as a full-time regular employee. See contract job. Controllable risks (of a business) Risks that a business can control internally, such as its choice of employees, internal organization, policies, and procedures. See also uncontrollable risks.

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Personal Finance Glossary Convenience goods Goods that consumers don't want to spend much time and effort on. They are widely available, easy to find, and not usually expensive. Staple goods are considered by consumers as necessary to everyday life. Impulse goods are not necessities. They are things that people see in a store and decide to buy in the moment. Convenient Easy to get without a lot of effort. Corporation A separate legal business entity. It is legally independent from its owners. Co-signer The person with established credit who shares responsibility for the debt on a co-signed account. See also primary borrower. Co-signing A way to take advantage of someone elses credit history to get a credit card. See also co-signer and primary borrower. Counterfeiting Making illegal copies of money and trying to pass them off as the real thing. Cover letter A short letter from a job application that gives additional information about their qualifications for and interest in the job. A cover letter is sometimes called a letter of application. CPSC See Consumer Product Safety Commission (CPSC). Credit A commitment to pay for something in the future, instead of paying for it right away. When you use credit, you are creating debt. See also credit card and lines of credit. In U.S. financial policy, credit refers to the amount that banks or other financial institutions are able to loan to their customers. Credit bureau An organization that keeps credit history records. Credit card A card that looks similar to a debit card, but is connected to a credit account. Credit counseling service An organization designed to educate and advise consumers about credit, debt management, and budgeting. The people who work to advise consumers at these services are credit counselors. Credit history Your history of using credit and making payments. A good credit history makes it more likely that creditors will trust you. See also credit score. Credit limit The maximum amount of credit a creditor will give you. Credit score A number that tells lenders how likely you are to make payments on time. Credit union An institution that accepts deposits and makes loans like a bank, but credit unions are cooperative. This means that each person who has an account at the credit union is also a part owner of the credit union. Most credit unions are not set up to make a profit for their owners.

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Personal Finance Glossary Currency A specific type of money, such as the U.S. dollar, Euro, or Japanese yen. Current assets See current ratio. Current liabilities See current ratio. Current ratio A ratio that shows a companys liquidity at a point in time. The current ratio is calculated with this equation: Current assets Current liabilities. Current assets are assets that are expected to be converted to cash within one year. Current liabilities are liabilities that are expected to be paid within one year. Customer service The part of a company that interacts with customers after they have purchased the product. Debit cards Small wallet sized cards that can be electronically scanned to transfer money from one bank account to another, similar to using a check. Debt Money, goods, or services that one person owes to another person or institution. The longer you wait to pay off certain kinds of debt, the more money it will cost you in interest. Debt capital The money you raise through debt funding. Debt collector A person who collects debts on behalf of a creditor. See also Fair Debt Collection Practices Act (FDCP). Debt funding When you get money by borrowing it and promising to pay it back later. Debt investment An investment without ownership that promises a specific return on the investment. In a debt investment, the investor lends money to a person or organization and charges interest on the amount that was loaned. See also equity investment. Debt management plan (DMP) A specific, intensive program offered by a credit counseling service. See also debt settlement program. Debtor A borrower who owes money to another person or organization. See also debt and creditor. Debt ratio The comparison of a company's debt to its assets. The debt ratio is calculated with this equation: Total liabilities Total assets. Debt relief service See credit counseling service. Debt services default The failure to make a payment, such as a scheduled house payment or the interest on a credit card. See also defaulting.

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Personal Finance Glossary Debt settlement program A program that claims it can get you out of debt by negotiating your debt to a much lower amount and working out a payment plan with your creditors. See also debt management plan. Debt to equity ratio A ratio that compares the company's debt to the amount of equity invested into the company. The debt to equity ratio is calculated with this equation: Total liabilities Total equity. Declaring bankruptcy The process of filing legal papers that state that you are unable to pay your debts. See also bankruptcy. Deductible A dollar amount you will be expected to pay before the insurance plan takes effect and the insurance company starts paying. See also meeting the deductible. Defaulting When a borrower pays what is owed. Demand How much of something consumers want. See also supply. Department of the Treasury See U.S. Department of the Treasury. Dependability Being reliable, showing up on time, doing what you say you will do, and being willing to take on tasks as needed. Dependent A member of the household who depends on your income, such as a child or relative. Depending on experience (DOE) A salary that is likely to be higher for someone with more experience, education, or skills. Deposit See transaction. Depreciation When an equity investment or fixed asset decreases in value. See also appreciation. Depression See recession. Desires Things people want to have in order to be happy and feel good. Desire-based marketing shows people who are achieving what they desire. See also fears. Direct competitors Companies that offer basically the same product, such as two companies that both sell jeans, sports cars, or pizza delivery. The companies do not have to offer identical sets of goods or services. As long as they offer one identical good or service, they are direct competitors in that area. See also indirect competitors and noncompetitors. Direct deposit When an employer puts money straight into the employee's bank account, without using a check.

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Personal Finance Glossary Disability insurance Insurance that provides income if an injury or illness prevents you from working. See also workers' compensation. Discipline Self control. Disclosure The act of making information known. Discount rate The interest rate that the Federal Reserve charges member banks to borrow money from the Federal Reserve. Discretionary expenses When you buy things that you want but don't need, those purchases are discretionary expenses. See also non-discretionary expenses. Discrimination When a person is treated unfairly and worse than others, usually because of personal prejudices or stereotypes. Diverse Made up of many different things. Diversification An investment strategy in which investments are spread out among many different types, so that the good investments balance out the bad ones. This helps to deal with risk. Dividend A payment you receive as a stockholder who owns stock in a company that offers dividends. Usually, a company issues dividend payments to stockholders at regular intervals throughout a year. Not all companies offer dividends. DOE See depending on experience (DOE). Domestic Within ones own country. See also foreign. Domestic commerce The buying and selling of products within a particular country. Domestic trade When products and money are exchanged within a single country. See also global trade. Domestic workers Workers who work in people's homes performing duties like childcare and cleaning. Dow Jones Industrial Average A stock market indicator that averages the stock prices of the 30 biggest U.S. companies in the NYSE and NASDAQ stock markets. Down payment A cash payment made by the borrower of a percentage of the total cost of the asset. Home or car loans usually require a down payment. Dumpster diving A type of identity theft that involves stealing from someone's garbage. Earned income Income that you receive for work you've done. See also unearned income.

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Personal Finance Glossary Earning a living Making enough money to afford the things you need and want. Economics The study of how people decide what they want and what they are willing to pay or give in order to get it. People have to make those kinds of decisions because of scarcity. Economic utility See types of utility. Economy A system of trade. An economy is created by the exchange between producers and consumers. See also market economy, planned economy, mixed economy, and traditional economy. EEOC See Equal Employment Opportunity Commission (EEOC). Elastic demand See elasticity. Elasticity The elasticity of demand is how much the price of a product affects the demand. Elastic demand increases or decreases based on changes in the price of a good or service. Inelastic demand stays about the same no matter the price of a good or service. Factors that affect elasticity include competition, income, need, and time. Electronic Funds Transfer Act A law that allows you to dispute incorrect information on electronic statements you receive from creditors. Electronic funds transfer system A computer system that makes it possible to transfer money from one bank account to another without using paper checks or notes. Emotional motive See consumer motives. Endorsement A signature on the back of a check. See also blank endorsement, restrictive endorsement, special endorsement, conditional endorsement, and qualified endorsement. Endorsing a check Signing the back of a check you have received before giving it to a bank. See endorsement. Enterprise See business. Entity A being, such as a person or company. Entrepreneur A person who starts a business. Entrepreneurship The process of starting a business. Environmental Protection Agency (EPA) A U.S. government agency with the purpose of protecting human health and the natural environment. EPA See Environmental Protection Agency (EPA).

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Personal Finance Glossary Equal Employment Opportunity Commission (EEOC) A U.S. government agency that enforces federal laws against job-related discrimination based on race, color, religion, sex, national origin, age, disability, or genetic information. Equities See stocks. Equity The amount of ownership an investor has in an equity investment. Equity can also refer to the value of a companys assets after all creditors are paid except those with ownership interest in the company. A companys equity is also called its net worth. Equity capital The money you raise through equity funding. Equity funding When you offer to share ownership of a business with investors in exchange for money. Equity investment An investment in the ownership of something with the hope that the investment will increase in value and be worth more at some future date. See also debt investment. Estate All the assets that were owned by a person. See estate tax. Estate tax A federal tax that is charged when someone dies. The tax is charged on the person's estate. Estimated tax A way for self-employed people to estimate the amount they will owe in taxes and spread that amount into four payments throughout the year. This is helpful for people who don't have an employer performing payroll withholding for them. Ethical behavior Appropriate, moral, and fair behavior. Etiquette A collection of standards that define proper social behavior in a specific community. Exchange rate The calculation of how much one unit of currency is worth when converted to another currency. Exchange rate risk The risk that investors and business people have when converting their money to a foreign currency to invest or do business. It is the risk that the money might not be worth as much when it eventually gets converted back to the domestic currency. Excise tax See transaction taxes. Exit stage The stage of a business when the business owner makes plans to end their day-to-day commitment to run the company. See also Improve stage, Identify stage, Operate stage, Start stage, and Plan stage. Expected expenses Expenses you've planned for and can predict. See also unexpected expenses.

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Personal Finance Glossary Expenses Things a person or company pays money for. See also expected expenses and unexpected expenses. Exponential growth In compounding, exponential growth is growth that speeds up as the value of the account grows. Exporting When a country sells its products to people, organizations, and governments in other countries. See also importing. Extract To take something out by force. See also extractive industry. For extracting a zipped file, see unzipping. Extractive industry The industry that physically takes resources from the earth, such as metals, minerals, oil, plants, and so on. The extractive industry is sometimes called the primary industry because it is one of the first types of industry to develop in an economy. Factor See factoring. Factoring When a company sells its accounts receivable to another company. The company that buys the accounts is called the factor. The factor pays the company right away for the accounts and then collects the money from the customers when it is due. Factors of production The forces that combine to make the production of goods and services possible. See land, labor, capital, and entrepreneurship. Fair Credit Billing Act A law that allows you to dispute incorrect information on paper bills that you receive from creditors. Fair Credit Reporting Act A law that states that you are entitled to receive one free copy of your credit report each year, you are permitted to dispute incorrect information on the report, and you are entitled to have negative information removed from the report after seven to ten years. Fair Debt Collection Practices Act (FDPC) A federal law that sets rules that debt collectors must follow when they are dealing with you, such as when they are allowed to contact you. Fair Labor Standards ACT (FLSA) An act that sets standards for overtime pay, recordkeeping, medical leave, and youth employment. The FLSA also sets the minimum wage. FDA See Food and Drug Administration (FDA). FDIC See Federal Deposit Insurance Corporation (FDIC). Fears Things people want to avoid. Fear-based marketing focuses on the bad things that will happen to people who don't buy the product. See also desires. Features The notable qualities or characteristics of a product. See also benefits.

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Personal Finance Glossary Federal Deposit Insurance Corporation (FDIC) A corporation created by the federal government to provide insurance on the money in bank accounts. Federal government The central government of the U.S. Federal income taxes Taxes that are paid to the federal government on an individual's or company's income. This money is used for things like national defense, law enforcement, the national debt, social programs, community development, the costs of running the country, and more. Some federal tax money is distributed to state governments, so that states can provide services to the people who live there. Federal Insurance Contributions Act (FICA) tax See Social Security taxes. Federal Open Market Committee (FOMC) The Feds policy making committee. They make many of the key decisions about the Fed's monetary policy and goals. Federal Reserve System The central banking system in the U.S. The Federal Reserve System is also called the Federal Reserve and the Fed. The Fed is the only organization with the right to print U.S. currency. The U.S. Department of the Treasury prints currency for the Fed. Federal taxes Taxes that are paid to the federal government. Federal Trade Commission (FTC) A U.S. government agency intended to protect consumers and prevent unfair methods of competition. The FTC and the Department of Justice enforce antitrust law, which forbids agreements among competitors to fix prices or prevent fair competition. The FTC regulates mergers, which are when two or more companies combine into one company. Federal Unemployment Tax Act (FUTA) A federal tax act that provides income for workers who are unemployed. The employer pays this tax while the employee is employed. This money does not come out of the employee's paycheck. Fees Specific charges that a borrower must pay a lender in exchange for specific services. These charges are different from interest. FICA See Social Security taxes. File compression (zip) utility A program that turns regular files into compressed files, so they are smaller. File name extensions A special set of letters or numbers at the end of a file name that show what type of file it is. Filing taxes When you complete a tax form that shows how much you owe in taxes. In the U.S., federal income tax forms for the previous year must be filed by April 15. Finance area (of a company) The part of the company that handles the money.

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Personal Finance Glossary Finance charge The interest rate on a credit card. Finances The money you have and the things you own that are worth money. Financial Accounting Standards Board (FASB) The organization that regulates GAAP standards. Financial analyst A finance professional who helps people and companies decide how to invest their money. Financial exchange When commodities are bought and sold using money. Financial goals Goals that are specifically related to money. Your financial goals will help you decide how you want to earn money and what you will do with it. Financial health How well a company is doing financially. Financial plan A way of organizing your finances so you'll be able to set and meet financial goals, while making sure you have enough money to spend on things you need. Financial planner A financial professional who helps people or businesses set and meet financial goals. Financial planning Making a plan for the future about how to manage your finances. Financial ratio A way to compare two financial factors in order to analyze a companys financial health. See also ratio. Financial reserve See reserve. Financial resources Your financial resources include the money you have, the money you earn and receive, and the things you own that are worth money. Financial resources are also sometimes called economic resources. Financial responsibility Being responsible about the way you spend your money. Financial risk The possibility of losing money. Financing Using credit to pay for things. Financing activities Transactions that bring cash in or out based on borrowing and lending. These transactions appear on a cash flow statement. Fiscal policy The way the government collects money and spends it on the goods and services it provides. A fiscal policy sets rules for how government funds will be collected and used.

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Personal Finance Glossary Fixed assets Physical items such as real estate or equipment. Fixed assets are usually illiquid assets. Fixed expense An expense that is the same amount each time you pay it. See also variable expense. Fixed interest rate See interest rate. FLSA See Fair Labor Standards ACT (FLSA). Folder view A way of viewing the files and folders on a computer. Food and Drug Administration (FDA) A U.S. agency "responsible for protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs, biological products, medical devices, our nation's food supply, cosmetics, and products that emit radiation." Forecasting Predicting sales. A sales forecast is sometimes called a projection. Foreign Outside of ones own country. See also domestic. Form utility See also types of utility. Franchising A way of turning a company into a parent company with smaller retail outlets owned by independent operators. A franchisee is an independent operator of a franchise business. The franchisor is the parent company. Free enterprise system See capitalism. Free market economy See market economy. Free trade When governments do not interfere with trade between countries. See also global trade. FTC See Federal Trade Commission (FTC). Full-time job A job that is usually 40 hours of work per week. See also part-time job. Functional motive See consumer motives. Fund An amount of money. Funding When you gather money from one or many sources to pay for the cost of starting up or running a business. FUTA See Federal Unemployment Tax Act (FUTA).

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Personal Finance Glossary GAAP (generally accepted accounting principles) The set of standards commonly used for accounting in the U.S. GDP (gross domestic product) A country's GDP is the value of the goods and services produced in that country. This is one of the most common ways to measure a country's economy. When it increases, the economy is growing stronger. When it decreases, the economy is growing weaker. Generally accepted accounting principles (GAAP) See GAAP. GLB See Gramm-Leach-Bliley Act (GLB). Globalization The trend toward local, regional, or national economies becoming connected through communication, business, and trade. Global marketplace The market created by buyers and sellers who exchange products between different countries. Global trade When products or money are exchanged between different countries. See also domestic trade. Goal Something specific that you want to achieve in the future. Good An item of value that a person can buy or make and then sell to other people. A good is a type of commodity. See also service. Government bailout When the government gives money to a company that is failing in order to help it recover. Government bond A type of treasury in the form of a certificate given by the government to an investor in exchange for money. It promises to pay the investor back a larger sum of money in the future. See bonds. Government organizations Public organizations that exist to serve the people in the city, state, or country that they live in. Grace period The amount of time you have to make a credit payment before a late fee is added. Gramm-Leach-Bliley Act (GLB) An act that provides guidelines for how financial institutions must protect your personal information. Gross domestic product See GDP. Gross pay The full amount of wages or salary that an employer agrees to pay an employee. This is the amount they agree on when the employee accepts the job. Gross pay is the amount of the employee's paycheck before payroll withholding is performed. See also net pay.

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Personal Finance Glossary Gross profit See profit. Group dynamics The study of the way groups of people interact and work with each other. Guarantee A commitment to a product. A guarantee is less formal than a warranty and doesnt usually have a specific time frame or paperwork. Hacking A form of identity theft where others attempt to log into your email or other online accounts, and then steal the personal information they find there. Haggling See negotiation. Hardware All the physical parts of a computer that can be seen and touched, such as wires, buttons, circuits, CD-ROM drives, and other physical parts. See also software and software programs. Head hunter A person or company that helps match job seekers with job openings. Health and safety regulations See OSHA. Health insurance Insurance that protects you against the costs created by sickness or injury. It helps pay for medical bills and expenses. Homeowner's insurance See property insurance. Honesty Truthfulness. Hourly job A job in which the employee is paid an hourly rate. The amount the employee earns may be different in each paycheck, depending on the number of hours he or she worked. See also salaried job. Human resources (HR) department The part of a business that handles things like employee hiring, firing, insurance, retirement benefits, payroll, and employee complaints. Human risks Risks created by people. Identify stage The stage of a business when the person who is considering starting the business identifies a business opportunity and decides whether to pursue it. See also Exit stage, Improve stage, Operate stage, Plan stage, and Start stage. Identity theft When a person steals your personal information, such as your name, Social Security number, or bank information. Illiquid assets Assets that are difficult to turn into cash. Importing When products are brought into a country. See also exporting.

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Personal Finance Glossary Improve stage The stage of a business when business people make plans to change or expand an operating business. See also Exit stage, Identify stage, Operate stage, Start stage, and Plan stage. Impulse goods See convenience goods. Income The amount of money a person earns or receives. See also earned income and unearned income. Income statement A document that shows the company's revenue and expenses during a specific time period, such as a year, month, or quarter (three months). An income statement is sometimes called a profit/loss statement. Income tax See federal income tax. Index fund A fund that works similarly to a mutual fund, except that instead of being managed closely by an investment expert, it is set up to track the overall performance of the stock market. It follows a stock market index. Indirect competitors Companies that offer goods or services that can be substituted for each other, but which are a little different from each other. The customer can choose one instead of the other, so the companies are competitors, but not directly. See also direct competitors and noncompetitors. Individual retirement account (IRA) A common type of retirement account that you can get directly from an investment company. An IRA can be similar to a 401(k), but the IRA is not set up by your employer. Industries The way jobs are sorted based on the type of work involved in doing them. Inelastic demand See elasticity. Inflation When the value of a dollar goes down, so you can't get as many goods or services for your dollar. Inflation is a sign of a weak economy. Informational interview A meeting held to learn more about a career or workplace. Information technology (IT) department The department of a business that manages technology and systems, such as a computer network, database, or phone system. Information utility See also types of utility. Installment A payment. Installment-certain annuity A type of annuity that issues regular payments to you for a set number of years. If you die before this time period ends, the payments can be transferred to a member of your family, such as a spouse or a child. An installment-certain annuity is sometimes called a period certain annuity. See also straight annuity.

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Personal Finance Glossary Installment credit When you borrow a specific amount and agree to pay it in a specific number of payments of equal amounts. See also closed-end installment credit, noninstallment credit, and revolving credit. Insurable risks Risks insurance companies are willing to provide insurance for. See also uninsurable risks. Insurance A type of risk protection that you can purchase from an insurance company. An insurance premium is the amount that you must pay the insurance company in order to get insurance. In return for the premium, the insurance company agrees to pay for the costs if the risk turns out to have a negative outcome. Your insurance coverage is the amount that the insurance company is willing to pay. There may be a maximum amount the insurance company will pay, or it may agree to pay all costs above a certain amount. Insurance adjustor An employee of an insurance company who is responsible for verifying insurance claims. Insurance coverage See insurance. Insurance plan The agreement you have with your insurance company that includes all the details of your coverage. Interest An extra fee that a borrower must pay to a lender. Some bank accounts also offer to pay the bank account holder interest on the money in the account. Interest rate The percentage of interest that a borrower must pay to a lender. An interest rate can be fixed, so that it says the same over time, or it can be adjustable, which means it may change. Intern A person working in an internship. Internal Revenue Service (IRS) The government agency in charge of administering federal taxes. Internship A temporary job that helps you gain workplace skills and see what working at a particular company is like. Interview A meeting where an employer and job applicant get to know each other and discuss the job and employee's qualifications. The person conducting the interview is called the interviewer. The job applicant is the interviewee. Investing When you give your money, time, or energy to something in order to get a reward in the future--usually a financial reward. By investing money, and by saving money in accounts that offer interest, you are putting your money to work. This way, not all of your money comes from your paycheck. Your investments can produce money for you while you are doing other things.

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Personal Finance Glossary Investing activities Cash transactions related to the companys financial investments. These transactions appear on a cash flow statement. Investment A way to use money to make more money by purchasing something that you think will grow in value or that will produce income for you. Investment account A diversified account that a finance professional sets up and maintains for you. Investment commodity A very basic good or service. Commodities have utility for the majority of consumers. They are almost always needs instead of wants. Commodities are usually precious metals, agricultural products, energy sources, or sources of meat. Investment portfolio A collection of investments and financial holdings. Invoice A record of a product that was provided but not yet paid for. Invoices are also called bills. IRA See individual retirement account (IRA). IRS See Internal Revenue Service (IRS). IRS audit When the Internal Revenue Service performs an examination of your tax forms to make sure everything you have claimed is accurate. IT department See information technology (IT) department. Job opening See job opportunity. Job opportunity A job that a company has available. The company will then look for a new employee to fill the job. Job opportunities are also called job openings. Job performance How well an employee does his or her job. Job shadowing When a person observes and follows around another person at their job. Joint checking account A checking account that people share. Most joint accounts are shared by two people, but some banks allow three or more people to have joint accounts. Labor As a factor of production, labor is the human mental and physical effort used to turn natural resources into goods or services that are useful to people. On its own, land just exists. It takes human brains and energy to figure out how to use natural resources or turn them into something useful to people. Land As a factor of production, land means not just the surface of the earth, but everything in the universe that wasn't created by people. This includes all natural resources, such as air, water, plants, sunlight, rocks, and minerals.

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Personal Finance Glossary Law of Demand One of the two parts of the Law of Supply and Demand. It says that if all other factors are equal, the demand for a product will go down if the price goes up, and the demand will go up if the price goes down. See also Law of Supply. Law of Supply One of the two parts of the Law of Supply and Demand. It says that if all other factors are equal, the supply will increase if the price goes up, and the supply will decrease if the price goes down. In other words, the higher the price, the more of the product producers are willing to make available. See also Law of Demand. Law of Supply and Demand An economic law that says the price of a product is determined by the supply of and demand for that product. The price is the point where the amount supplied is equal to the demand. This means the amount consumers are willing to buy at a certain price is equal to the amount producers are willing to make available at that price. See also Law of Supply and Law of Demand. Leasing See renting. Ledger A companys main book for recording transactions. Legal department A department some very large companies have to handle legal paperwork and lawsuits, and to provide legal advice. Letter of application See cover letter. Liabilities Amounts of money that a company owes. Liability A legal term for being held accountable and obligated to fulfill a commitment. See also liability insurance. Liability insurance Insurance that protects you by helping to cover costs that are caused by events you're responsible for. Life insurance Insurance that protects your family against the negative financial impact that would be caused by your death. Lifestyle A way of living that shows the beliefs and opinions of a person or group of people. Limited liability company (LLC) A newer form of business entity. An LLC is a cross between a corporation and a partnership and offers some of the benefits of each. Line of credit A type of short-term credit a lender can offer that includes a maximum amount of credit and a maximum amount of time, but that lets the borrower decide how much of that credit to use. Liquid assets Assets that can be quickly turned into cash.

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Personal Finance Glossary Liquidation policy On a bank account, a liquidation policy tells you when and how you're able to remove money from the account. Liquidity The ease in which you can convert an asset to cash. If an asset is liquid, you can get your money out and use it easily. List of references A list of people who are willing to discuss a job applicant with a potential employer. See also references. Loan Money that you borrow from a person or organization with the commitment to pay back the amount in full, usually with a specific time limit, number of payments, and interest rate agreed on in advance. Local taxes Taxes that are paid to a local government within a state, such as a county, city, water or fire management district, school district, or library district. In some areas, local governments don't charge taxes. In others, they may charge property taxes or other taxes and provide services such as police or fire services. Long-term capital gain See capital gains tax. Long-term goal A goal that you work for over a long period of time. Long-term goals can take many months or even years to accomplish. Main hard drive The place where most of the files and folders are stored on a computer. It's often called the C: drive, but it can have other names. Manufacturing industry The industry that takes extracted materials or other manufactured materials and turns them into new tangible, physical products. This industry is also called the secondary industry, because it happens after the raw goods are extracted from the earth. Marginal cost The increase in price necessary to increase the marginal utility of a product. Marginal utility The utility that is gained with each individual unit of a good that you purchase or consume. Often, the first unit that you consume has the greatest marginal utility, and each unit after that has less marginal utility. Market Where producers and consumers gather to exchange commodities. This is where economic activity takes place. A market can be a physical location or a way of categorizing types of exchanges. Market economy An economic system that is regulated by the interactions between producers and consumers in the market. A pure market economy is not controlled or regulated by the government at all. The prices of commodities are determined purely by the interactions between supply and demand. A market economy is also called a free market economy because the market is free of government regulation and involvement. The government allows private producers and consumers to regulate themselves.

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Personal Finance Glossary Marketing The combination of ways that sellers research, plan for, and communicate with consumers in a market. Marketing area The part of a company that promotes the product. Means exam A survey about your income, expenses, and assets that you must take as part of the process of declaring bankruptcy. Medicaid A health care program for low-income individuals and families. Medicaid is funded by both federal and state money. See also Childrens Health Insurance Program and Medicare. Medicare A federal health care program for people age 65 or older and others who meet special criteria. See also Childrens Health Insurance Program and Medicaid. Medicare tax A federal tax that is used to provide medical benefits for people who are ages 65 and over. Meeting the deductible When you have paid the deductible amount and the insurance company must now pay some or all of the rest of the costs above that amount. Member banks The small bank branches that are members of the Federal Reserve. Microfinance Providing loans or other financial services to low-income individuals or small groups who can't access banks or wouldn't qualify for loans. The borrowers use these loans to fund small business ideas, which ideally helps them escape poverty. Minimum balance The smallest amount of money that can be kept in a bank account. If your account drops below the minimum balance, the bank can make you pay them a fine. Minimum wage The lowest amount workers can be paid for hourly work. Mixed economy An economic system in which the government is involved in regulating the economy in some ways, but not as fully as in a planned economy. Most economies are mixed economies, with at least some government involvement and some private ownership. Even when citizens want a market economy with economic freedom, most citizens still want the government to put at least a few regulations in place to protect consumers and small businesses. Monetary policy The decisions a government makes to control the supply of money, availability of money, and value of money. Money In U.S. financial policy, money refers to cash that is circulating, and the cash people or businesses have in their bank accounts. Money market account A common type of account offered by many banks that is used in a similar way to a savings account. A money market account invests your money in low risk investments with predictable interest rates.

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Personal Finance Glossary Monopoly When a business becomes too powerful and makes it hard for others to compete. One company controls an entire area of goods or services, so that customers don't have other choices. Mortgage A home loan. Motivation The strength of a motive. Motive A reason for doing something. See also motivation. Mutual fund A company that takes money from many investors, pools that money together, and then invests the money in stocks, bonds, other securities, or a combination of these. Mutual funds let investors benefit from investment opportunities that might not be reasonable for them as individuals investing without a fund. NASDAQ A major stock market whose trades take place over computers, not in person. NASDAQ Composite Index A stock market indicator that tracks a set of thousands of representative stocks in the NASDAQ stock market and uses them as an indicator of how the NASDAQ stock market as a whole is performing. Natural risk Risks caused by nature. Navigate On a computer, navigating is the process of opening folders to get to an address on the computer. Needs Things that you are unable to do without. When you spend money on things you need, these purchases are called your non-discretionary expenses. See also wants. Negotiation A discussion in which people try to agree on something, such as the price of a product. Negotiation is sometimes called bargaining or haggling. Net pay The amount of money that actually gets paid to the employee after payroll withholding. See also gross pay. Net profit See profit. Networking A way for employers and employees to connect using social and professional relationships. Net worth See equity. New Deal A series of government programs that began during the Great Depression. The New Deal's goals were relief of the unemployed and poor, recovery of the economy to a stable level, and reform of the U.S. financial system so that in the future, situations like the Depression could be avoided. See also Works Progress Administration.

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Personal Finance Glossary New York Stock Exchange (NYSE) The world's largest exchange for trading stocks and other securities. It's located in New York City, on Wall Street. Professional brokers and traders who represent buyers come to the NYSE each day to sell, buy, and trade stocks. NGO Abbreviation for non-government organization. See nonprofit industry. Noncompetitors Companies that have no areas where they compete with each other directly or indirectly. They have no goods or services in common, and a consumer could not substitute one for the other. See also direct competitors and indirect competitors. Non-discretionary expenses When you spend money on things you need, these purchases are called your non-discretionary expenses. See also discretionary expenses and wants. Non-government organization (NGO) See nonprofit industry. Noninstallment credit Credit that is paid all at once, in a single payment. See also installment credit. Nonprice competition When a company tries to be better than its competitors in a way that is not related to price. This is a way for a company to sell a product for a higher price, instead of always competing for the lowest price. See also price competition. Nonprofit corporation A corporation that does not have to pay federal taxes, and usually does not have to pay state or local taxes either. Nonprofit corporations are sometimes called tax exempt corporations. Nonprofit industry The group of organizations that do not have a profit motive. Because these organizations are not run by the government, they are often referred to as nongovernment organizations or NGOs. Nonverbal communication skills The skills of using and interpreting body language and behavior. NYSE See New York Stock Exchange (NYSE). Occupational Safety and Health Administration See OSHA. Online banking Accessing your bank account using the Internet. You can complete transactions online. Open market operations The buying and selling of government securities, such as bonds, on the open market. The Federal Reserve uses open market operations to increase or decrease the supply of money. Operate stage The stage of a business when the business is fully running. See also Exit stage, Identify stage, Improve stage, Start stage, and Plan stage.

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Personal Finance Glossary Operating activities Revenues and expenses involved in running a business. This information is included on a cash flow statement. Operating expenses The costs of running a business. Operating system A system that manages all of the hardware and software on a computer. It helps the physical parts of a computer communicate with each other and makes sure the software programs can complete tasks. Each operating system has its own look and works a little differently than other operating systems. The words operating system can be abbreviated OS. Opportunity cost When you put your money into an investment, you are giving up the opportunity to make other investments with that money. The value of the next best opportunity you are giving up is called the opportunity cost. Optimism When a person looks at something favorably and predicts a good outcome. See also pessimism. Organized See being organized. OSHA (Occupational Safety and Health Administration) A U.S. government agency that creates and enforces standards for workplace health and safety. These standards are called health and safety regulations. Health and safety regulations are rules for employers and employees to follow in order to keep their workplace healthy and safe. Outcome The end result of an employee's workplace behavior. Outsourcing When a company gives the responsibility for a certain aspect of its business to another company. Overdraft The status of having spent more money than you have in your bank account. An overdraft means your account balance is negative, because you owe the bank money. Owner equity See equity. Paid time off Time you can take away from a job without your salary or wages being reduced. Paid time off is sometimes called vacation pay. Paraphrasing Restating something in your own words. Partnership A business with two or more owners. It is more complicated to set up than a sole proprietorship but less complicated than a corporation. Owners have personal liability and the business is a pass-through entity. Part-time job A job that is less than 40 hours per week. See also full-time job. Pass-through entity A business where taxes on the companys income are paid on the personal tax forms of the companys owners. This is called pass-through taxation.

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Personal Finance Glossary Pass-through taxation See pass-through entity. Payroll withholding When a company sets aside a specific amount of an employee's paycheck for specific purposes, such as income tax, Social Security tax, Medicare tax, or a retirement fund. A company is required to perform payroll withholding for tax purposes. Some other types of withholding may be legally required, or they may be voluntary, such as a retirement fund. Payroll withholding spreads out the cost of taxes throughout the year, so employees don't have to pay the entire amount they owe all at once on April 15. This helps make sure that people pay their taxes. Pay stub A short summary an employer provides to an employee each time the employee is paid. It shows the employee's gross pay and the amount of payroll withholding for that pay period. Peer-to-peer lending Lending to individuals. Perception The process of selecting, organizing, and interpreting information in order to determine its meaning. Performance In investing, the performance of an investment is how well it produces more money for you. See return on investment (ROI). Period certain annuity See installment-certain annuity. Permanent life insurance A life insurance policy that provides coverage for your entire life, so that it is not limited to a specific period of time. Permanent life insurance is also called cash value life insurance because it can grow in cash value, and you may be able to exchange the policy for cash or use it as collateral. See also term life insurance. Personal finance The way you manage your own money and the things you own. Personal goals Your own individual goals that you want to accomplish. They may be things you can accomplish alone, or they may require the help of other people. Personality Your individual differences, characteristics, and other defining factors. Personal liability When a business owner can be held personally responsible for the financial debts or illegal actions of the company. See also liability. Pessimism When a person looks at something unfavorably and predicts a bad outcome. See also optimism. Phishing An online form of identity theft where thieves send emails or pop-up windows to your computer, pretending to be financial institutions, companies, or government agencies. Place utility See also types of utility.

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Personal Finance Glossary Plagiarism When a person represents someone else's work as their own. This is dishonest and not allowed, particularly in school or work environments. Disciplinary action may be taken to stop people who are plagiarizing others. To avoid plagiarism, use citation. Planned economy An economic system in which the government controls the prices of commodities. The government regulates the interactions between producers and consumers. In a planned economy, the government determines what commodities get produced, how they are produced, and who consumes them. Production and consumption are controlled by the public sector, instead of by private businesses and individuals. Commodities are collectively owned by the public, instead of by private businesses or individuals. A planned economy is also called a command economy or a centrally planned economy. Plan stage The stage of a business when business people research the business idea and prepare a written business plan. See also Exit stage, Identify stage, Improve stage, Operate stage, and Start stage. Possession utility See also types of utility. Poverty line The minimum level of income thats required to meet the standard of living. Preexisting condition A long-term health condition, such as asthma or diabetes, that you were diagnosed with before you applied for health insurance coverage. Prejudice A judgment or opinion made before becoming fully informed about the topic. Premium See insurance. Prepaid 529 plan See 529 plan. Pretexting A form of identity theft where a person tries to gain access to your personal information without the authority to do so. Price adjustment Getting a partial refund for a product that has changed prices. Price ceiling The maximum price the government allows sellers to charge for a specific product. See also price floor. Price competition When companies compete to offer lower prices than their competitors. See also nonprice competition. Price floor The minimum price the government allows sellers to charge for a specific product. See also price ceiling. Price stability When prices of goods and services in an economy stay about the same for a long period of time. Price stability is a sign of a strong economy.

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Personal Finance Glossary Primary borrower In an account with co-signing, the main person who uses the credit and is responsible for paying back the money owed. See also co-signer and co-signing. Primary industry See extractive industry. Primary source A source with firsthand knowledge about something. When you contact a primary source, you are going directly to an individual to ask them about their knowledge. See also secondary source. Principal In a bank account, the principal is the amount of money you have in the account. With credit or loans, the principal is the amount you owe a creditor. Prioritizing Ranking things in order of importance. Private enterprise system See capitalism. Private equity investments Investments that are made in private companies. These companies can be any size, but individual investors often make private equity investments in small businesses. See also angel investor and venture capital. Privately held stock An unregistered stock that is not traded on public markets. A privately held stock has not been registered with the Securities and Exchange Commission (SEC). See also publicly held stock. Private sector Businesses that are owned by individuals are called the private sector because they are owned by private individuals instead of the government. Private businesses usually have the purpose of making a profit for their owners. They are not necessarily meant to help the good of the public. See also public sector. Producer Someone who makes a commodity available for sale or exchange. If you're selling something or offering it to trade, you are a producer. An economy is created by exchanges between producers and consumers. Product See commodity. Production The process of creating and providing a commodity to consumers. Production area (of a company) The part of a company that manufactures the product or provides the service that the company is selling. Productivity How much work an employee completes in a specific amount of time. Professional development The development of skills, knowledge, and experience that will help you advance in your career. Professionalism Behaving in a way that is appropriate in the workplace.

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Personal Finance Glossary Profit A company's gross profit is calculated by subtracting the cost of goods sold (supplies and labor) from the total revenue. Net profit is calculated by subtracting all expenses from the total revenue. Profit/loss statement See income statement. Profit motive A business with a profit motive is a business that exists in order to make a profit. Projection A guess or estimate about what something will be like in the future. Propaganda Material that's intended to influence the way you think or feel about something, instead of providing unbiased and neutral information about it. Property insurance Insurance that covers property you own or rent, such as a home or apartment, and the items inside the property. Homeowner's insurance covers property in a home you own, and renter's insurance covers property in a home you rent, such as an apartment. Property taxes Taxes that are charged on property, such as real estate, cars, boats, business inventories, and other properties. The state controls how property can be taxed, but property taxes are usually charged by local governments. See local taxes. Psychological motive See consumer motives. Public The collective group of people living in a country or other governmental area, such as a state. Publicly held stock A registered stock that is available to the general public. See also privately held stock and Securities and Exchange Commission (SEC). Public sector Governmental organizations and agencies are sometimes called the public sector because they usually have the purpose of protecting the good of the public. See also private sector. Pure risk A risk of something negative happening, with no possibility of profit or gain. Either things will remain the same, or something bad will happen. Pure risk is also called static risk. See also speculative risk. Qualified endorsement A type of endorsement that includes a signature on the back of a check and a note that says you should not be held responsible if the check's funds are insufficient. Quality control When a business makes procedures to control the quality of their product. Quarterly Every three months.

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Personal Finance Glossary Quaternary industry An industry that does not seem to fit into the extractive, manufacturing, trade, or service industries. Jobs in this industry might involve research and development, work with technology, high level finance jobs, or other things. Rainy day fund See cash reserve. Rate of return See return on investment (ROI). Ratio A mathematical comparison of one thing to another. It is calculated by taking one thing and dividing it by the other. A ratio is written as either a number or percentage. See also financial ratio. Rational motive See consumer motives. Real estate investment The purchase of property in the form of buildings or land, such as a home, an office building, or land with nothing built on it. Real estate is an equity investment, since you own the property and will benefit if it increases in value. Receipt A record of a transaction that has already happened. Recession A period when there isnt enough money or credit in the economy, and the economy is shrinking instead of growing. An especially bad recession is called a depression. Recommendation When a friend or acquaintance recommends you as a good candidate to a potential employer. Reconciling a bank statement Comparing your checking register to your monthly bank statement provided by the bank to make sure they match. Recording Writing something down, either on paper or on a computer. Referral When a friend or acquaintance connects you with a job opportunity. Registered stocks See Securities and Exchange Commission (SEC). Rent See renting. Renter's insurance See property insurance. Renting When you pay to use something that belongs to someone else. Many people rent homes and apartments instead of buying them. Leasing is another word for renting. Research and development department The department of a company that researches and develops new products or improvements to existing products. Reserve An amount of money you've set aside in case of an emergency. Also called a financial reserve.

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Personal Finance Glossary Reserve requirement The amount of money that the Federal Reserve requires its member banks to hold in reserve and have available for bank account holders to withdraw. Responsibility Getting your work done, fulfilling your commitments, and taking ownership of your work. Restrictive endorsement A type of endorsement that includes a signature on the back of a check and a note with restrictions on how the check can be used. Resume A document that describes a worker's employment experience, strengths, skills, education, and other qualifications. Retailer A person or company who sells products to consumers. See also wholesaler. Retirement The point in a person's life when they stop working full-time. In the U.S., most people retire at some point after the age of 62. Retirement account An account designed to help you save and invest money for retirement. Common types of retirement accounts include 401(k) accounts and individual retirement accounts (IRA). Return on assets (ROA) An equation that shows a company's profitability by comparing how well the company produces a return from its assets. It compares the company's income to its assets. ROA is calculated with this equation: Net profit before tax Total assets. Return on equity (ROE) The return an investor gets from an equity investment. ROE is calculated with this equation: Net profit before tax Total equity. Return on investment (ROI) The amount of money you eventually receive in return for your investment. This is also sometimes called the rate of return (ROR). Revenue The money that flows into a company. A companys revenue is also called its income. Revenue stream A particular way of creating revenue. Revolving credit When you are approved for borrowing up to a specific credit limit, and you can choose how much of that credit to use and when to pay it off. See also installment credit and noninstallment credit. Risk The possibility of loss or failure. The chance that something negative might happen. Risk management The attempt to protect against risk by identifying and minimizing it. Risk manager The finance professional in charge of risk management at a company or business.

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Personal Finance Glossary Risk tolerance The amount of risk you are able to handle without being too negatively affected by failed investments. ROA See return on assets (ROA). ROI See return on investment (ROI). ROR See return on investment (ROI). Rule of 72 A rule for helping calculate approximately the number of years required to double the principal of an account based on its annual compound interest rate. To use the rule of 72, divide 72 by the interest rate of the account. Run on a bank See bank run. Salaried job A job in which the employee is paid the same amount of money in each paycheck, regardless of how many hours the employee worked. See also hourly job. Salary The earned income you receive when you are paid the same amount of money for your work on a regular basis, no matter how many hours you work. See also wages. Sales department The part of a company devoted to selling the product to customers. Sales tax See transaction taxes. Savings 529 plan See 529 plan. Savings account A bank account intended for money you will be saving in the bank. See also checking account. Scarcity When people want more of something than is available. Scarcity means that people must make choices, because they can't have everything they want. See economics. S corporation A corporation with special tax status. S corporations are taxed like a partnership, as a pass-through entity. SEC See Securities and Exchange Commission (SEC). Secondary industry See manufacturing industry. Secondary source A source that provides information indirectly, without firsthand experience. A secondary source may have already collected information from primary sources for you, such as a magazine or website that provides reports and statistics about products. Secured credit A way to link an asset to a credit card or loan, so the creditor can take the asset if you fail to pay.

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Personal Finance Glossary Securities Investment opportunities, such as stocks or bonds, represented by a document. This document is usually on paper, but some securities are represented by online or computer-based documents. Securities and Exchange Commission (SEC) A U.S. government agency with the purpose of regulating the securities market and protecting investors. In order to sell stock on a public stock market in the U.S., companies must register their stock with the SEC. Registered stocks are stocks that have been through the SEC's registration process. Self awareness The knowledge of who you are as an individual. Self-employment tax A federal tax for people who are self-employed. This is how selfemployed people pay their Social Security and Medicare taxes, since they don't have an employer to help ensure they pay these taxes. Service Something of value that a person can do for other people. A service is a type of commodity. See also good. Service industry The industry that provides services to individual consumers, other businesses, or both. A service business may use or transform a product, but the main thing consumers are paying for is a service, not just a physical product. The service industry is sometimes called the tertiary industry, since it develops after the extractive and manufacturing industry. Share See stocks. Shopping goods Products that consumers spend more time deciding on. Shopping goods usually last longer than convenience goods, and are usually more expensive. Short-term capital gain See capital gains tax. Short-term goal Goals that take less time to accomplish than long-term goals do. Signing over a check See special endorsement. Simple interest Interest gained only on the principal amount. The interest generated by the account does not get added to the principal and start generating its own interest. See also compound interest. Single-payment loans Loans that require payment in full on a specific date, either with or without interest. They are a form of noninstallment credit. Skills Things a person is able to do well. Skimming A form of identity theft where an employee at a store, restaurant, or other retailer scans your credit card or debit card to steal its number.

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Personal Finance Glossary Social classes The arrangement of people in a society. In the United States, social classes are usually defined by how much money people have and what sort of work they do. Each level of a social class is called a stratum. Multiple levels of social classes are called strata. Social investing When the goal of an investment is to both have a high financial return and make a positive impact on the world. Social Security number A nine-digit number assigned to a U.S. citizen or resident. It is used for tracking and identifying people. Most babies born in the U.S. receive a Social Security number soon after birth, and most people in the U.S. have them. Social Security taxes Federal taxes that are used to provide income for retired and disabled people and their families. Social Security taxes are also called the Federal Insurance Contributions Act (FICA) tax. Software A computer's non-physical parts. It can't be seen or touched, but it can display things on a computer screen. Software can do things like store information and help the physical parts of the computer communicate with each other. See also hardware and software programs. Software programs A type of software with a specific purpose, such as sending and receiving email, creating text documents, browsing the Web, and other tasks. See also hardware and software. Sole proprietorship A business with a single owner. This is the simplest business structure to set up. The owner has personal liability, and the company is a pass-through entity. S&P 500 See Standard & Poor's 500 Index. Special endorsement A type of endorsement that includes a signature on the back of a check and instructions that state that the check can be cashed or deposited by another person. Allowing a check to be cashed or deposited by another person is called signing over a check. Specialty goods Items that a consumer considers special and luxurious. The consumer is willing to seek out this unique product and probably pay more for it. Speculative risk A risk that has the possibility of profit or loss. You take speculative risks because you hope to gain a profit. See also pure risk. Spending power The amount of goods and services a person can buy with the amount of money they have. As you earn more money, your spending power increases. In order for your spending power to increase, the amount of money you earn must increase faster than the inflation rate increases. If the amount of money you earn doesn't rise as fast as the inflation rate, your spending power will decrease.

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Personal Finance Glossary SSN See Social Security number. Standard of living How easy it is for people in a society to provide for their needs and wants, and the needs and wants of their family. Standard & Poor's 500 Index A stock market indicator that includes a large group of 500 companies selected by a committee to represent all aspects of the market well. It is often called the S&P 500 for short. Staple goods See convenience goods. Start stage The stage of a business when business people start doing the tasks involved in getting the company up and running. See also Exit stage, Identify stage, Improve stage, Operate stage, and Plan stage. Startup costs The costs of starting up a business and keeping it going until it can pay for itself. State income taxes Taxes that are paid to the state government on an individual's or company's income. Not all states have an income tax. Statement of owners equity A financial statement that focuses just on the owner equity. Like the income statement, it covers a specific period of time. State taxes Taxes that are paid to the state government. State taxes pay for things like schools, roads, libraries, and more. Static risk See pure risk. Stereotype An oversimplified or inaccurate assumption that is shared by a group of people. Stock market A market where stock and other securities are bought, sold, and traded. Stock market index An indicator of how the stock market as a whole is doing. It analyzes the stock prices and values of a specific group of representative stocks and averages them out to show how the market as a whole is doing. Stock market indicator A way of analyzing the performance of a stock market as a whole. Popular stock market indicators include the Dow Jones Industrial Average, Standard & Poor's 500 Index, and the NASDAQ Composite Index. Stocks A popular type of equity investment in which you can buy partial ownership of a company in a tiny fractional amount called a share. Stocks are often called equities. Stock table A common way of presenting information about how stocks and securities are performing.

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Personal Finance Glossary Straight annuity A type of annuity that begins issuing regular payments to you at the time you agreed on, and then keeps making these payments for the rest of your life. Once you die, the payments stop, even if there is still money left in the annuity account at that time. See also installment-certain annuity. Strata See social classes. Stratum See social classes. Stress The mental pressure placed on a person by factors in the world around them. See also stressor. Stressor A situation or event that causes stress. Subchapter S corporation See S corporation. Supply How much of something producers are making available. A supply of a capital good is the amount of the good that has been produced. The supply of a service is the amount of a service that producers are willing to provide. See also demand. Tangible If something is tangible, it is made of physical matter and can be seen and touched. Target market A specific group of people who are likely to want a product. Tariff A tax placed on imports or exports. Taskbar An area on the computer screen that shows you all of the things you have open on your computer. Each of the things you have open is a window. Tax A financial obligation that a person or company is required by law to pay to the government. Tax bracket The rate at which your income is taxed. Tax deferred account A type of account such as a traditional 401(k) that allows the account holder to contribute money to the account without paying taxes on that money. Taxes are due on the money when it is withdrawn from the account at a future date. Tax department A department some very large companies have to handle tax issues and paperwork. Tax exempt corporation See nonprofit corporation. Tax refund The money the government owes to you if you paid more than you owe in taxes. Tax return See 1040EZ tax form.

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Personal Finance Glossary Telecommuting When an employee is allowed to work from a location other than the company's location. Teller In banking, a teller is a person who works at a bank and who can help you complete a transaction. Term life insurance A life insurance policy that is limited to a specific period of time. The term is the length of time during which you are covered by the life insurance policy. See also permanent life insurance. Tertiary industry See service industry. Ticker symbol A combination of three or four letters that identifies a stock in information about the stock market. Time utility See also types of utility. Time value of money The assumption that money is worth more the sooner it is received. If you receive money today, you can put it into an account that offers interest and start earning interest on that money right away. Trade The exchange of things of value. Trade balance A countrys trade balance is the comparison of its imports to exports. Trade industry A specific type of industry that requires skilled labor. Tradesperson A person with special skills in a certain type of industry. A tradesperson has gone through special training or education to do this type of work. Traditional economy An economic system in which production activities are done as needed in order to satisfy a specific demand. A traditional economy is not regulated by the public sector or private sector. It is determined by tradition, custom, and the specific needs of a group of people. Traditional economies are focused on producing the basic elements needed for survival, such as food, shelter, and clothing. Transaction In banking, a transaction is when you add or remove money from a bank account. A deposit is when you put money in the bank. A withdrawal is when you take money out of the bank. A transfer is when you move money from one account to another. Transaction taxes Taxes that are charged on sales of goods and services. These are often state taxes. Sales taxes are a common type of transaction tax that are usually calculated as a percentage of the total sale amount. Sometimes, transaction taxes are calculated based on a physical quantity in units, such as a gas tax that charges a tax per gallon. This type of tax is called an excise tax. Transfer See transaction.

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Personal Finance Glossary Treasurer An individual who oversees many aspects of a company's finances, such as its insurance purchases, risk management, spending, investing, or many other things. Treasuries Notes and certificates provided by a government as a form of currency. They are worth a specific amount of money and issued by the government. Treasury Department See U.S. Department of the Treasury. Trustworthy See being trustworthy. Truth in Lending Act A law that states creditors must provide written rules to the borrower about the costs and fees associated with credit or a loan. Truth in Savings Act A law that states that a bank must provide a person opening a new bank account with a written statement explaining the rules and policies of the account. Types of utility Form utility is the value added to a product by changing its physical form to make it more satisfying to the consumer. Place utility is the value added to a product by making it available in a location where the consumer can easily find it. Time utility is the value added to a product by making it available when the consumer wants it. Possession utility is the value added to a product by transferring ownership over to the consumer. Information utility is the value added to a product by providing the consumer with useful information. See also utility and marginal utility. Uncontrollable risks (of a business) Risks that a business cant control, such as external financial factors, natural disasters, and so on. See also controllable risks. Unearned income Income that you receive for reasons other than work you've done, such as money received from gifts or investments. See also earned income. Unemployment insurance A program that provides money to help replace your income if you have lost your job. Unemployment rate The percentage of people who don't have jobs in a country or area. A low unemployment rate is a sign of a strong economy. Unemployment tax Some states have an unemployment tax, like the federal government does. See Federal Unemployment Tax Act (FUTA). Unexpected expenses Expenses that you didn't predict. Unexpected expenses usually occur when something goes wrong or when things don't go as you planned. See also expected expenses. Uninsurable risks Risks that insurance companies are not willing to provide insurance for. See also insurable risks. Unsought Something that people do not particularly want, look for, or seek out.

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Personal Finance Glossary Unsought goods Things that people sometimes need but dont usually think about buying. Unzipping When you return a zipped file to its normal size. Also called extracting a file. U.S. Department of the Treasury The part of the federal government that controls the finances of the country. The standard bills and coins used in the U.S. are produced by the Department of the Treasury for the Federal Reserve bank to circulate. Utilities Services that are necessary for running a home, such as electricity, heat, water, Internet, and telephone service. Utility The usefulness of something, such as a product, or the product's ability to meet a want or need. See also marginal utility and types of utility. Vacation pay See paid time off. Value What something is worth to people. If something has value, people are willing to give money or something else of value in exchange for it. Values also mean the priorities, principles, and beliefs that guide your life. Variable expense An expense that changes each time you pay it. See also fixed expense. Venture capital Money used to fund a business in its early stages. However, venture capital investments happen in stages of the business that are more stable than the very beginning startup stage. This often takes the form of a private equity investment. See also angel investor. Verbal communication skills The skills of speaking and listening. Volatile investment An investment that can change quickly and without much warning. Its value might go up or down dramatically. Volatility Unpredictability. W-2 form A tax form that employers are required to provide to employees that proves how much the employee was paid and how much was withheld from the employee's paycheck in payroll withholding. This form is also called the Federal Wage and Tax Statement. Employers must provide W-2 forms for the previous year to each employee before January 31st. Wages The earned income you receive when you are paid by the hour for your work. See also salary. Wants Things that you choose to spend money on. When you buy things you want but don't need, these purchases are called your discretionary expenses. See also needs and non-discretionary expenses.

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Personal Finance Glossary Warranty A specific promise about product performance that is written down in formal documentation and is usually limited to a specific time frame, so it can expire. See also guarantee. Web browser A software program for navigating the Web and displaying Web sites and Web pages. Mozilla Firefox and Internet Explorer are common Web browsers. Wholesaler A company that buys goods in large quantities in order to resell them in smaller quantities to retail businesses or other wholesalers. See also retailer. Will A legal document that states what you want to have happen to your finances after your death. A will usually states how your financial resources and assets should be distributed. Window What you see on the screen when you open Firefox or other software programs. Withdrawal See transaction. Workers' compensation Disability insurance that provides payments to an employee who develops an injury or other disability while on the job, until the employee is able to return to work. Workers' compensation is usually short term. Works Progress Administration (WPA) The primary relief program formed during the New Deal. Written communication The skills of reading and writing. Zipped file A compressed file. Zip utility See file compression (zip) utility.

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