Personal Financial Literacy / % flashcard

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What is Personal Financial Literacy?

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Personal Financial Literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing.

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What is a budget?

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A budget is a plan that outlines expected income and expenses over a specific period, helping individuals manage their finances.

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What does it mean to save money?

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Saving money means setting aside a portion of income for future use, rather than spending it all immediately.

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What is the difference between needs and wants?

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Needs are essential items required for survival (like food and shelter), while wants are non-essential items that enhance quality of life (like luxury goods).

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What is interest?

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Interest is the cost of borrowing money or the earnings from saving or investing money, usually expressed as a percentage.

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What is a savings account?

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A savings account is a bank account that earns interest on the money deposited, allowing individuals to save while keeping their funds accessible.

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What is a credit score?

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A credit score is a numerical representation of a person's creditworthiness, based on their credit history and financial behavior.

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What is the purpose of insurance?

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Insurance is a financial product that provides protection against financial loss or risk, helping individuals manage unexpected events.

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What is a loan?

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A loan is a sum of money borrowed from a lender that must be repaid with interest over a specified period.

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What does it mean to invest?

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Investing means allocating money into assets or ventures with the expectation of generating a profit or income over time.