Personal Financial Planning Vocabulary

focal point of developing a personal financial plan

• budget

• goal

• savings account

• retirement

explains how a person changes financial position, earnings, consumption and savings throughout the life cycle

• goals

• budgets

• family life cycle

• retirement

assists in planning financial situations throughout the year; acts as a control mechanism in regards to the way money is spent

• goal

• family life cycle

• budget

• 401K plan

allows users to withdraw and deposit money at any time; used for daily expenses

• budget

• stocks

• savings account

• checking account

earns interest over time; has limited number of transfers and withdrawals

• savings account

• checking account

• 401K plan

• stocks

similar to savings accounts but has a higher interest rate, fixed terms, and a fixed rate

• checking account

• 401K plan

• certificate of deposit (CD)

• stocks

contributions are exempt from income tax and can be rolled over into an IRA or future employer's plan

• 401K plan

• CD

• savings account

• budget

employee sponsored benefit plans which provide individuals with the chance to put a portion of their earnings in a financial portfolio

• savings account

• 401K plan

• CD

• stocks

allows individuals to open an account and begin saving funds toward retirement with tax benefits; can be traditional or ROTH

• 401K plan

• CD

• IRA

• stocks

investment in publicly traded companies

• 401K plan

• stocks

• IRAs

• CDs