Term
| Personal Financial Planning |
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Definition
| The process of managing your money to achieve personal economic satisfaction. |
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| A formalized report that summarizes your current financial situation, analyzes your financial needs, and recommends future financial activities. |
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| The stages in the family situation and financial needs of an adult. |
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| Ideas and principles that a person considers correct, desirable, and important. |
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| The study of how wealth is created and distributed. |
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| A rise in the general level of prices. |
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| A set of federal laws allowing you to either restructure your debts or remove certain debts. |
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| What a person gives up by making a choice. |
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| Increase in an amount of money as a result of interest earned. |
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| The amount to which current savings will increase based on a certain interest rate and a certain time period; also referred to as compounding. |
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| The current value for a future amount based on a certain interest rate and a certain time period: also referred to as discounting. |
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| Day-to-day financial activities necessary to manage current personal economic resources while working toward long-term financial security. |
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| A private storage area at a financial institution with maximum security for valuables. |
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| A financial statement that reports what an individual or a family owns and owes; also called a net worth statement or statement of financial position. |
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| Cash or other property with a monetary value. |
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| Cash and items of value that can easily be converted to cash. |
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| Debts that must be paid within a short time, usually less than a year. |
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| Debts that are not required to be paid in full until more than a year from now. |
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| The difference between total assets and total liabilities. |
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| The inability to pay debts when they are due because liabilities far exceed the value of assets. |
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| The actual inflow and outflow of cash during a given time period. |
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| A financial statement that summarizes cash receipts and payments for a given period; also called a personal income and expenditure statement. |
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| Inflows of cash to an individual or a household. |
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| Earnings after deductions for taxes and other items; also called disposable income. |
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| Money left over after paying for housing, food, and other necessities. |
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| A specific plan for spending income; also called a spending plan. |
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| The difference between the amount budgeted and the actual amount received or spent. |
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| The amount by which actual spending exceeds planned spending. |
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| The amount by which actual spending is less than planned spending. |
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| A tax imposed on specific goods and services, such as gasoline, cigarettes, alcoholic beverages, tires, and air travel. |
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| A tax imposed on the value of a person's property at the time of death. |
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| A tax levied on the value of a property bequeathed by a deceased person. |
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| The net amount of income, after allowable deductions, on which income tax is computed. |
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| Money received for personal effort, such as wages, salary, commission, fees, tips, or bonuses. |
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| Money received in the form of dividends, interest, or rent from investments; also called portfolio income. |
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| Income resulting from business activities in which you do not actively participate. |
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| An amount not included in gross income. |
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| Income that is not subject to tax. |
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| Income that will be taxed at a later date. |
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Term
| Adjusted Gross Income (AGI) |
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Definition
| Gross income reduced by certain adjustments, such as contributions to an individual retirement account (IRA) and alimony payments. |
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| An amount subtracted from AGI to arrive at taxable income. |
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| A set amount on which no taxes are paid. |
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| Expenses that can be deducted from adjusted gross income, such as medical expenses, real estate property taxes, home mortgage interest, charitable contributions, casualty losses, and certain work-related expenses. |
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| A deduction from AGI for yourself, your spouse, and qualified dependents. |
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| The rate used to calculate tax on the last (and next) dollar of taxable income. |
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| Total tax due divided by taxable income. |
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| An amount subtracted directly from the amount of taxes owed. |
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| A detailed examination of your tax return by the Internal Revenue Service. |
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| The use of legitimate methods to reduce one's taxes. |
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| The use of illegal actions to reduce one's taxes. |
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| Profits from the sale of a capital asset such as stocks, bonds, or real estate. |
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