Consumer
A person or organization that uses a product or service
Credit
The granting of a loan and the creation of debt; any form of deferred payment
Debt
An obligation of repayment owed by one party (the debtor/borrower) to a second party (the creditor/lender); in most cases this includes repayment of the original loan amount plus interest
Economy
A system by which goods and services are produced and distributed
Financial Literacy
The knowledge and skillset necessary to be an informed consumer and manage finances effectively
Interest
A fee paid by a borrower to the lender for the use of borrowed money; it is typically calculated as a percentage of the principal (original amount)
Loan
A debt evidenced by a "note" which specifies the principal amount, interest rate and date of repayment
Personal Finance
All of the decisions and activities of an individual or family regarding their money, including spending, saving, budgeting, ect.
Loan Shark
A person or business that offers loans at extremely high interest rates
Creditor
A person or business that offers loans to a borrower. In most cases, this includes repayment of the loan plus interest
Recession
A period of temporary economic decline during which trade and industrial activity are reduced; generally identified by a fall in gross domestic product (GDP)
Financial Planning
The steps you take now and in your future to insure financial security, it is unique to you
What are the key components to financial planning?
1. Asses your financial goals
2. Set money goals
3. Write out a detailed plan
4. Execute your plan
5. Know your money personality
6. Regularly monitor and reassess your financial plan
7. Replace money myths with money truths
You don't have to spend more _______ than you make just to look good in front of your friends. You can learn basic money principles and put them into practice
money
When you manage money well, you'll experience deeper ____________
satisfaction
It's really simple, personal finance is 80% ________ and 20% head knowledge
behavior
Money _______ is easy- it's controlling your behavior that's the real challenge
math
As you think about the __________ American family, remember that normal is broke. You don't have to be normal!
normal
Why do we allow ourselves to be outsmarted when it comes to our own money?
We like stuff- lots of it
We are told that debt is ________. It has become acceptable in our culture to use credit to buy things
normal
We are taught that we can _____ ______________. This is simply not true
buy happiness
Our debt system keeps us from building _______ because we are constantly giving our money away to pay for things we bought years ago
wealth
In America, we are bombarded with marketing ads that ________________________. "You can buy it today with no money down and no interest for 90 days!
push us to buy things
We want you to be ________ of the financial condition of our country - and we want you to __________ it!
aware, question
T/F
Learning the language of money is not that important because you will be able to depend on financial planners to manage your money
False
What are reasons why credit is marketed so heavily to consumers in the United States?
- There is a strong consumer demand for big ticket items
- The credit industry has become extremely profitable
- After WWI, credit laws in the U.S were relaxed in an attempt to create a mainstream alternatives to loan sharks for the working class
During the Great Depression, New Deal policy makers came up with mortgages (home loans) and consumer lending products that convinced commercial banks that:
Consumer credit could be profitable
During the Great Depression, what did the New Deal policy makers come up with that convinced commercial banks consumer credit could be profitable?
Mortgages (home loans) and consumer lending products
When it comes to managing money, success is about ____% head knowledge and ____% behavior
20%
80%
What legislative program, established during the Great Depression, helped shape consumer lending policies that convinced commercial banks that consumer credit could be profitable? In what way was the program intended to help consumers?
- The New Deal
- it intended to help consumers by helping Americans regain their financial footing because of the mortgages and consumer lending policies that convinced commercial banks that consumer credit could be profitable despite bankers long-held re
Explain why buying things on credit was not common prior to 1917?
Because it had never been legal for lenders to charge interest rates high enough to turn a profit, it wasn't worth the risk for the middle and lower class citizens
What was the major financial change between post WWII borrowers and borrowers after 1970?
The people in the 1970's continued to borrow, like their parents since WWII but they didn't have the post-war period's high paying jobs
What effects did the Great Depression have on the credit industry?
Consumer credit could be profitable despite bankers long-held reluctance to lend to the working class
What effect did the post-war era have on consumer borrowing?
Americans "learned" to borrow in the midst of prosperity, borrowed because they believed their incomes would continue to grow
Knowing the __________ of money allows you to tell your money what to do
language
That means before deciding where your money is going to go _________ you get your paycheck
before
You'll be able to communicate effectively with _________, financial planners and insurance agents
bankers
Focus on understanding the _________ as you move through this course
vocabulary
You'll become the ________ on your money. Winning with money is not complicated, but it does involve some basic knowledge.
expert
(To become money smart) First, you need to be comfortable with ______ _______
basic math
(To become money smart) Second, you must start learning the __________ of money
language
(To become money smart) Third, and this is the hardest part, you need to learn how to manage your ________ with money
behavior
Winning with money isn't just about understanding how it works- its about putting your ________ into it. That's the 80% behavior we've talked about
heart
Money is a ______. It's up to you to manage it.
tool
The best way to manage money is to learn how to manage _____
you
You need to know your natural ________ when it comes to money. For instance, are you more likely to spend or save?
instincts
Once you know your money ____________, you develop a financial plan that works for you
personality
It's in recognizing who you really are that allows you the ____________ to grow and learn
oppurtunity
What can you learn by identifying your money personality?
Developing a money plan that works for me
How has the attitudes of teenagers towards money changes over the recession?
- 9/10 have been affected
- more grateful
- less likely to ask for things they want
- appreciate parent's hard work
- appreciate their family
- important to have an emergency fund
- important to understand debt
How can marketing affect you decisions when it comes to spending money?
they want us to buy now, pay later
- encourages debt
What is the snapshot of the "normal" American family?
don't de fooled by the outside images of new cars and expensive homes, most Americans are struggling financially and drowning in debt
What are the 3 levels of winning with money?
survival, comfort, secure
When it comes to managing money, success is about _______% knowledge and
_______% behavior
20%
80%
When it comes to personal finance, the math is easy. What's challenging is managing
your _______________.
Behavior
Which of the following is a consequence of spending more than you make?
a. Stress
b. A cycle of debt
c. Missed opportunity to save and invest