What is financial planning?
Everyone should have a financial plan. Now, what is financial planning? It's a comprehensive evaluation of your current and future financial state that uses variables you already know and predicts future cash flow. The first and biggest step to becoming a financial planner is having a budget with a goal in mind for saving and spending in the future.|
Financial Planner: A financial planner helps clients prepare ways to achieve their financing goals. However, they can be expensive, so it's important to hire one when it's most necessary. It's essential to consider the expense to hire a financial planner and just how beneficial a financial planner will be for you.
Emergency Funds: Arguably the best step in your financial plan is creating an emergency fund. Long-term benefits will be beneficial for many reasons. You'll live with a lot fewer financial worries because you'll find assurance in knowing that you saved up for emergency situations. Also, if you can learn to save money in your emergency fund, you can save money for any goal that you have.
Multiple Income: Sometimes when saving money becomes a necessity, getting a second job could also be beneficial. You may love the job that you currently have, but getting a second one creates another source of income. Do you work crazy hours, and getting a second job won't be the easiest? There are other ways to generate income! If you have a bunch of extra stuff collecting dust in your basement or attic, why not use eBay or take it to the flea market and sell it? The flea market is a great way to bond with the family, makes you some extra cash, and who knows, you may have a gold mine that's just waiting to be sold!
Having a financial plan is a great way to stay on top of how your financial goals are holding up. Finding yourself struggling to come up with a plan for your finances? Hiring a financial planner might be your best option, as they provide you the assistance to reach your goals. You can gain the confidence needed to make sensible decisions about money that help you achieve your goals in life.
What is financial literacy? In today's day and age, it's easy for this generation to forget the value of a dollar. At one point, cash used to be the only way purchases were made. While having a debit card to deal with transactions is more convenient, it's easy to miss out financial literacy. You may be wondering what is financial literacy? It is the knowledge to make financial decisions that affect our daily lives.
Save Your Money: As you go through life, you'll encounter many savings and spending decisions that you have to make. Whether it's for small purchases such as getting the latest smartphone or a large purchase such as getting a new car or a home, you must make saving decisions. It's important to set goals for yourself to save money and creating a budget will help to provide all that you need to go through your daily life and start building up a category that will help you pay for that new purchase. It's recommended to put about 10-15% of your paycheck into an emergency fund so that you're ready for any unknown situation that arises.
Understanding your Credit Score: Wanting to becoming an entrepreneur? Goals are important and will help you in the process of your financial journey. Remember, personal credit is the most important factor in getting the business up and running. There are a few elements that are in your credit report that shape your credit score factors. Your total debt, type of accounts, number of late payments, and age of your accounts all affect your credit score. You’ll want to keep your Score between 650 (which is fair) and 750+ (which is excellent.)
In a world where future generations are transitioning away from paper money to credit cards, and now being able to make purchases on their phones (ie. Apple Pay, Samsung Pay, etc.) it's more important than ever to teach future generations the value of the dollar and give them the financial knowledge they need to be successful. With these tips at your disposal, we are confident that you will be in the right direction toward becoming financially responsible.
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A retirement savings plan established by an employer in which employees set aside a percentage of pay in an account that earns interest
Adjustable Rate Mortgage (ARM)
An adjustable rate mortgage is a long-term loan you use to finance a real estate purchase, typically a home. The interest rate on an ARM is adjusted, or changed, during its term.
American Opportunity Tax Credit
The American Opportunity Tax Credit (AOTC) is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. You can get a maximum credit of $2,500 per eligible student.
The amount that credit card companies charge for the use of a credit card.
Annual Percentage Rate (APR)
Also known as your interest rate, this interest rate determines the finance charges you pay on your account if you carry a balance.
Annual Percentage Yield (APY)
The effective, or true, annual rate of return. The APY is the rate actually earned or paid in one year, taking into account the effect of compounding. The APY is calculated by taking one plus the periodic rate and raising it to the number of periods in a year.
A resource with economic value that an individual, corporation or country owns with the exception that it will provide future benefits.
Is the process of transferring your debt from one credit card to another. This process is usually done to save on interest payments each month.
A for-profit business that accepts deposits and makes loans.
A statement given to account holders by a bank or credit union to keep them informed of all transactions they made during the statement period. These statements are sent on a regular basis or posted online.
A status of consumers or businesses that have been declared unable to pay his or her debts. It also refers to the legal process by which debtors seek federal protection from creditors when the borrower is unable to repay debt obligations.
Bonds are debt securities issued by corporations and governments.
An itemized summary of probable income and expenses for a given period. A budget is a plan for managing income, spending and saving during a given period of time.
Car insurance covers theft of and damage to your car or damage that your car causes, plus liability protection in case you are sued as a result of an accident.
Using your credit card and PIN to get cash from a bank or ATM, or by writing a convenience check. Typically, the card issuer charges a cash advance fee for the transaction and begins charging interest from the date you take the cash advance.
Certificate of Deposit (CD)
An account in which you deposit funds for a set term, with a financial institution, with the promise of a set interest rate. For most CDs you cannot make deposits or withdrawals to the account during this term.
An account held at a bank or credit union in which account owners deposit funds. Account owners have the privilege of writing checks on their accounts and are able to use ATM cards and debit cards to access funds.
Child and Dependent Care Credit
The child and dependent care credit is a nonrefundable tax credit to benefit tax payers who pay for child care or dependent care services.
Property required by a lender and offered by a borrower as a guarantee of payment on a loan. Also, a borrower's savings, investments or the value of the asset purchased that can be seized if the borrower fails to repay a debt.
A business organization that accepts from schools and lenders those loan accounts that have become delinquent or are in default and attempts to collect on these accounts.
The action or process of combining a number of financial accounts or funds into a single overall account or set of accounts.
The granting of money or something else of value in exchange for a promise of future repayment.
Cards that represent an agreement between a lender—the institution issuing the card—and the cardholder. Credit cards may be used repeatedly to buy products or services or to borrow money on credit. Credit cards are issued by banks, savings and loan associations, retail stores, and other businesses.
A person's payment activity over a period of time.
Also known as a credit line, a credit limit is the total amount of money that can be charged to a credit card. You can call your bank at any time to discuss your credit line, request for it to be lowered or request for it to be increased based on your spending habits/needs.
A credit rating is an independent evaluation of the credit risk, or likelihood of default, posed by an issuer of debt or by a specific debt issue.
A report compiled by one or more credit bureaus. A credit report details purchase history, all on-time or late payments, credit inquiries and information on any accounts ever opened with credit card companies. Your credit history shows how well you pay your bills on time and how much you may owe to other parties. Credit card issuers use this information to decide whether to provide their customers with credit cards.
A number based on information in a credit report, which indicates a person's credit risk and is formulated by weighing various factors such as employment, income, debt to income ratio and past payment behavior.
A person, financial institution, or other business that lends money.
A card similar to a credit card that allows money to be withdrawn or payments made directly from the holder's bank account.
Money owed in exchange for loans or for goods or services purchased with credit.
Default is the failure to promptly pay interest or principal when due.
A period of time during which students are not required to make loan payments, such as while enrolled full-time.
An electronic transaction in which money is deposited directly into a payee's bank account from a payer's bank account.
The portion of personal income available for spending after taxes and basic essentials have been deducted.
The amount of a person's paycheck that is available to spend or save.
Earned income is the payment you receive for the work you do. There are two ways to get earned income: You work for someone who pays you or you own or run a business or farm.
Earned Income Credit
The US federal earned income tax credit or earned income credit (EITC or EIC) is a refundable tax credit for low- to moderate-income working individuals and couples, particularly those with children. The amount of EITC benefit depends on a recipient's income and number of children.
An emergency fund is designed to provide financial back-up for unexpected expenses or for a period when you are not working and need income.
The difference between how much your house is worth and how much you owe on your mortgage.
A bond, deed, or other document kept in the custody of a third party, taking effect only when a specified condition has been fulfilled.
The collection of money and property owned by a particular person, that are to be distributed according to that person's will.
The Free Application for Federal Student Aid is a form that can be prepared annually by current and prospective college students (undergraduate and graduate) in order to determine their eligibility for federal student financial aid.
Having knowledge of financial matters and applying that knowledge to one's life.
A document that describes your current financial status, your financial goals and when you want to achieve them, and strategies to meet those goals.
Permitting the temporary halting of loan repayments, allowing an extension of time for making loan payments, or accepting smaller loan payments than were previously scheduled.
To take possession of a mortgaged property as a result of the borrower's failure to make mortgage payments.
The length of time you have before you start accumulating interest on an unpaid balance.
A type of financial aid that does not have to be repaid; usually awarded on the basis of financial need.
The amount people earn per pay period before any deductions or taxes are paid.
Also known as a living will, is a legal document in which a person specifies what actions should be taken for their health if they are no longer able to make decisions for themselves because of illness or incapacity.
The unauthorized use of your personal information, such as your name, address, Social Security number, or credit card information.
The payment people receive for providing resources in the marketplace. When people work, they provide human resources (labor) and in exchange they receive income in the form of wages or salaries. People also earn income in the forms of rent, profit, and interest.
Taxes on income, both earned (salaries, wages, tips, commissions) and unearned (interest, dividends). Income taxes can be levied on both individuals (personal income taxes) and businesses (business and corporate income taxes).
Individual Retirement Account (IRA)
Individual retirement accounts are a type of individual retirement arrangements (IRAs) that provide tax advantages as you save for retirement.
The general increase in prices and fall in the purchasing value of money.
The price of using someone else's money. When people place their money in a bank, the bank uses the money to make loans to others. In return, the bank pays interest to the account holder. Those who borrow from banks or other organizations pay interest for the use of the money borrowed.
The purchase of physical capital goods (e.g. buildings, tools and equipment) that are used to produce goods and services.
A legal agreement that provides for the use of something -- typically real estate or equipment -- in exchange for payment. A lease is usually legally binding, which means you are help to its terms until it expires. If you break a lease, you could be held liable in court.
A contract you sign with an insurance company, obligating it to pay a death benefit of a certain value to the beneficiaries you name.
Lifetime Learning Credit
The lifetime learning credit is for qualified tuition and related expenses paid for eligible students enrolled in an eligible educational institution. The credit is worth up to $2,000 and you may not claim this credit for a student, if you already claimed the American Opportunity Tax Credit for that student.
Line of Credit
A revolving credit arrangement you establish with a lender. The lender sets the credit limit, which is the most you can borrow under the arrangement.
A sum of money provided temporarily on the condition that the amount borrowed be repaid, usually with interest.
Refers to a matching dollar amount contributed by an employer to the retirement savings account of an employee who makes a similar contribution, usually to a 401(k) plan.
A jointly administered federal and state health care program for low-income people.
A federal health care program that pays for certain medical and hospital costs for people aged 65 and older (and for some people who are under the age of 65 and disabled); part of Social Security.
A payroll tax that is part of FICA, collected from most employees and employers to fund the hospital insurance provided under the Medicare system. Used to provide medical benefits for certain individuals when they reach age 65. Workers, retired workers, and the spouses of workers and retired workers are eligible to receive Medicare benefits upon reaching age 65.
A debt owed for loans for homes and real estate.
A professionally managed collection of money from a group of investors. A mutual fund manager invests your money in some combination of various stocks, bonds, and other products.
An amount of money saved for a special occasion, such as retirement or buying a house.
Gross pay minus deductions and taxes.
Short term loans with the highest interest rates.
A retirement plan set by an employer for its employees.
Is the management of money and financial decisions for a person or family including budgeting, investments, retirement planning and investments
Number of points paid for this loan. Points are usually only paid for home equity loans.
A range of investments held by a person or organization.
An insurance policy renters can take out to cover the value of their personal belongings while renting a home or apartment.
To retake possession of something when the buyer fails to make payments.
A brief account of a person's education, qualifications, and previous experience, typically sent with a job application.
Permanently leaving a job, career, occupation or active working life.
An individual retirement arrangement to which you make after-tax contributions and withdraw earnings tax free.
The process of setting income aside for future spending. Saving provides ready cash for emergencies and short-term goals, and funds for investing.
An account with a bank or credit union in which people can deposit their money for future use and earn interest.
A good or service that you want to buy in the future.
A schedule listing tasks that, when completed, will allow a saver to reach a savings goal.
a grant or payment made to support a student's education, awarded on the basis of academic or other achievements.
A loan that is backed with collateral; a loan for which the lender requires and the borrower offers property as a guarantee of repayment.
Social Security Tax
A payroll tax that is part of FICA and is collected from most employees and employers to fund Social Security, which provides old-age, survivors' and disability income.
A schedule listing tasks that, when completed, will allow a saver to reach a savings goal.
A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself dollar for dollar.
Fees charged on business and individual income, activities, property or products by governments. People are required to pay taxes.
You are underwater if you owe more on a loan secured by a home or other real estate than the current market value of the property.
A condition where people at least 16 years old are without jobs and actively seeking work.
Not protected against risk or loss; not secure.
A summary of a person's earnings and tax withholdings for an entire year. Employers must provide a W-2 to employees by the end of January for the previous year's employment to report annual income and withholding on the employees' tax returns.
A legal document which states your wishes for deposition of your belongings upon your death.
The amount of money that an employer withholds from an employee's paycheck. This money is deposited for the government on behalf of the individual taxpayer. (It will be credited against the employee's tax liability when her or she files a tax return.) Employers withhold money for federal income taxes in some states and localities.
The rate of return on an investment