| A | B |
|---|
| Scarcity | Relates to the fact that people have unlimited wants/needs and limited resources |
| Opportunity Cost | The most valuable alternative NOT chosen when a choice is made |
| Incentives | Reasons people make choices |
| Goals | Things that you want to accomplish |
| Values | A person's priorities in life |
| Liquidity | The ability to easily convert financial assets to cash |
| Estimate | To make an approximate calculation |
| Weigh | To consider |
| Risk | The chance of loss or injury |
| Short term goal | Can be accomplished in one year or less |
| Intermediate goal | Takes 2-5 years to accomplish |
| Long term goal | Will take longer than 5 years to accomplish |
| Consumable goods | Are purchased often and quickly used up |
| Durable goods | Are expensive items that may last 3 years or more |
| Intangible items | Cannot be touched but are important to one's well-being |
| Inflation | The rise in the level of prices for goods and services over time |
| Interest | The price that is paid to borrow money |
| Time Value of Money | The increase of an amount of money due to interest or dividends |
| Principal | The original amount of money deposited or borrowed |
| Interest Rate | The % amount that a financial institution will pay or charge you for your deposit or loan |
| Future Value | The amount your original deposit will be worth in the future based on a specific interest rate and period of time |
| Compounding | The process in which interest is earned on both the principal and any previously earned interest |
| Annuity | A series of equal, regular deposits |
| Accumulate | To collect |
| Present Value | The amount of money you would need to deposit now in order to have a desired amount in the future. |
| Rule of 72 | Estimates how long it will take to double your money at a set interest rate |
