There is plenty to learn and understand in the financial world when it comes to managing personal wealth. You don’t have to do it all on your own. Working with an experienced financial advisor is always recommended, but it helps to have a foundation of terminology, so you are clear on the best ways to handle your funds. Here are just 10 financial literacy terms to familiarize yourself with.
529 Plan
- Savings plan for future education costs
- Earn tax advantages by paying for qualified education expenses for a designated beneficiary
- Anyone can open and fund a 529 – parents, grandparents, relatives, friends
Bonds
- Debt security for governments or corporations that want to raise money
- Issued to raise money from investors and give the issuer a loan
- Earn value of the loan by a specific date and earn interest along the way
Budget
- Keep track of the money you have and where it goes
- Track fixed and variable costs, cash flow, one-time expenses, and profit
- Use to manage personal finances, business costs, or household expenses
Credit Score
- The rating of a person’s creditworthiness
- A three-digit FICO number that ranges from 300 to 850, the higher the better
- Identifies the risk of lending a person money based on credit history, spending, and payments
Disability Insurance
- Replaces lost income for anyone unable to work because of accident or illness
- Can be short-term or long-term
- Helps to pay for household expenses, childcare, and healthcare
Mortgage
- The legal agreement between a borrower and lender for a purchase of property
- Gives the lender the right to take the borrower’s property if the loan is not repaid with interest
- Payments are made up of principal, interest, taxes, and insurance
Retirement
- The deliberate removal of oneself from active working life
- Some retirements occur because of age, health complications, or company changes
- Semi-retirement is the reduction in workload or work hours
Stocks
- A small or large share of ownership in a company
- Also known as equity that comes in units of stock called shares
- Stock owners are entitled to a portion of the company’s profits and assets equal to the amount of stock owned
Taxes
- Includes income, estate, gift, sales, payroll, property taxes, and more
- Charged at the federal or state levels or both
- Selling a taxable asset that increased in value since purchase is subject to tax
Will and Trust
- Management of a person’s assets and estate according to their wishes after their death
- Names child guardians, estate executor, and states final wishes
- An alternative to a will is to choose a trust for the management and distribution of assets in life or after death
Get Support for Your Financial Literacy and Financial Future
Contact Hollander Lone Maxbauer to discuss your financial needs with a member of our team of select advisors and specialists, including any of these financial literacy terms. Strategize the basics of your financial plan, discuss your investment return for simple to complex financial needs, and feel good about where your money is and where it’s going. Contact us today to schedule a consultation.
