Financial Literacy Vocabulary
290 terms from 86 sources on LivePhysics. All Levels level.
Financial Literacy Vocabulary
Financial Literacy · All Levels · 290 terms
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Start in flip mode and read each definition before you turn the card over. Rate a term "Again" if you had to guess, so it comes back around sooner in your next pass. Once you can flip through a round without hesitating, switch to quiz mode to check that the terms stick without the definition in front of you.
Understanding Financial Literacy Vocabulary
Financial literacy is about following money from the moment it is earned until it is spent, saved, borrowed, or invested. The vocabulary in this deck gives names to the parts of that path. Income may begin as gross income, the amount earned before amounts are taken out.
Pre-tax deductions and taxes change what is left for use. Taxable income helps determine income tax.
A marginal tax rate applies to the last portion of income, while an effective tax rate describes the overall share paid. These ideas help explain why a paycheck can be smaller than the amount a job advertises.
A budget connects income to daily choices. Start by separating essential expenses from wants. Housing, food, transportation, required bills, and debt payments usually belong in the needs side.
Wants can still matter, but they must fit after important obligations. Savings should be treated as a planned part of the budget, not only as money left at the end. A savings goal gives saving a purpose.
An emergency fund protects a person when a repair, medical cost, or lost income appears. Without that cushion, an unexpected cost can become debt. Practice by using a realistic monthly income and assigning every dollar a job, including savings, needs, wants, and payments.
Credit terms explain the cost and responsibility of borrowing. A credit limit is not extra income. It is the most a lender allows someone to borrow.
The credit card balance is the amount currently owed. Paying only the minimum payment can keep a debt around for a long time because interest keeps being added. APR describes the yearly borrowing cost, while a daily periodic rate shows how card interest may build day by day.
A grace period can prevent interest on purchases when the full balance is paid on time. Payment history and credit utilization strongly affect a credit score.
Paying on time and using a small share of available credit show careful borrowing. Hard inquiries can matter too, especially if many applications happen close together.
Saving and investing require students to think about time. Compound interest means money can earn interest, then later earn interest on earlier interest. This can help savings grow, though debt can compound in the opposite direction.
Rate of return measures how an investment changes in value. Diversification spreads money across different investments to reduce the harm from one poor result. Inflation lowers buying power over time, so nominal value alone does not show what money can really buy.
The Consumer Price Index is one way people track broad price changes. Study these terms by drawing simple money flows, making up short examples, and explaining each choice in plain words. Connect every term to a decision, such as whether to save, borrow, pay a bill, or compare prices after sales tax.