AP®︎ Business with Personal Finance: Topic 3.1 Flashcards

Retaining part of current income instead of spending it, creating a personal asset for future purchases, emergencies, or living expenses

Money reserved for unexpected expenses or income interruptions, such as illness, repairs, or job loss

Compensation a financial institution pays for using deposited funds; it increases the value of the saver’s asset

I = P × r, where I is interest, P is the deposited principal, and r is the annual interest rate

Interest added to the balance so it can earn interest later; A = P(1 + r/n)^(nt), where P is principal, r is the annual rate, n is compounding periods per year, and t is years

The annual yield of a deposit account after accounting for compounding, used to compare account returns

How easily and quickly an asset can be converted into spendable cash

A plan that directs a predetermined amount of income to savings each pay period through payroll allocation or automatic transfer

A designated plan that may reduce or postpone taxes on eligible money saved for retirement

A designated account offering tax advantages to eligible individuals who save for qualified health-related expenses

The tendency to prefer an immediate reward over a larger or more valuable future benefit

The tendency for spending to rise as income rises, which can prevent increased income from producing greater savings

An unplanned purchase made with limited consideration of its effect on other financial priorities

Analysis of political, economic, social, technological, environmental, and legal forces in the external environment

An increase in the prices of goods and services that reduces the purchasing power of money

The quantity of goods and services that a given amount of money can buy

Government protection of covered deposits, generally up to 250,000 dollars as of 2024, if an insured financial institution fails

The federal agency that generally provides deposit insurance for covered accounts at insured banks

The federal agency that generally provides comparable deposit insurance for covered accounts at federally insured credit unions

A typically interest-paying, federally insured deposit account with substantial liquidity, though fees and minimum requirements may apply

A federally insured deposit account that may offer higher interest and convenient cash access but require a larger balance or higher fees than a savings account

A federally insured deposit account that usually pays higher interest in exchange for leaving funds deposited for a set term; early withdrawal commonly results in a penalty or lost interest

A federally insured deposit account designed for frequent transactions that usually pays little or no interest and may charge fees

An account used to store money for convenient sending or spending that typically pays no interest and may lack federal deposit insurance

An account holding volatile digital assets that typically pay no deposit interest and are not protected by federal deposit insurance

A goal connected to a feasible target amount, target date, regular contribution schedule, and suitable savings vehicle, with progress monitored and the plan revised as conditions change

Periodic savings = (target amount − current savings) ÷ number of saving periods

Favorable tax treatment for qualifying savings that encourages consumers to save for designated purposes such as retirement or health care