Personal Financial Planning - Vocabulary

focal point of developing a personal financial plan; need to have a set of priorities and a target date for achievement; require constant updating as a result of the changing family life cycle

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

assist in planning financial situations throughout the year; acts as a control mechanism in regards to the way money is spent; assist in reorganizing finances to reduce debt or increase savings

allow users to withdraw and deposit money at anytime, used for daily expenses; usually free

earn interest over time, but have limited number of transfers and withdraws allowed

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

employer-sponsored benefit plans which provide individuals with the chance to put a portion of their earnings in a financial portfolio; contributions are exempt from income tax and can be rolled over into an IRA or future employer’s 401K plan

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

investment in publicly traded companies; provides ownership in a company; can be common or preferred