With so many financial terms to master, it can be difficult for consumers to learn them all and understand how they may or not apply to their particular circumstances.
BOSTON (PRWEB) January 17, 2018
Understanding basic financial terms is key to living a healthy financial life. Sometimes important financial terms can be overwhelming or misleading and make it hard for consumers to navigate the best financial path. In an effort to help reduce confusion, ACCC explains financial terms every consumer should know in 2018.
“With so many financial terms to master, it can be difficult for consumers to learn them all and understand how they may or not apply to their particular circumstances,” said Steve Trumble, President and CEO of American Consumer Credit Counseling, which is based in Newton, MA. “Understanding even the most basic financial terms is a stepping stone towards achieving a successful financial life.”
According to the NFCC’s Consumer Financial Literacy Survey, 57 percent of respondents give themselves an A or B on their personal finance knowledge. Eighty percent of respondents believe they could benefit from advice and answers to everyday financial questions from a professional, up from 75 percent last year.
ACCC explains basic financial terms every consumer should know.
1. IRA – Individual Retirement Account. Anyone, employed or unemployed, can contribute to an IRA up to $5,000 per year. All investments are made by the contributor, meaning there is no match made by an employer. The money is only taxed when it is withdrawn.
2. 401(k) – This is an employer sponsored retirement plan. Most employers offer a match up to a certain percent. Employees are allowed to contribute up to $18,000 per year. This money is pre-taxed and will not be taxed until withdrawn.
3. Net Income – A consumer’s total income after taxes and deductibles.
4. Net Worth – Your assets (what you own) minus your liabilities (what you owe).
5. Annual Percentage Rate (APR) – Annual percentage rate. Interest paid on a loan, such as a credit card or student loan.
6. Compound Interest – Interest that’s calculated on the principal amount as well as the added interest.
7. Capital Gains – The difference between the value of something now versus how much it was purchased for.
8. Stock Options – Ability to buy your employer’s stock at a pre-set price within a specific time.
9. Return on Investment (ROI) – A measurement of a gain or loss. They can be calculated by dividing the gain or loss by the investment.
10. Credit Report – Outlines a detailed account of a person’s financial history.
11. Credit Score – A number assigned to a person that represents the information on a credit report. Credit scores are used to understand a person’s level of risk when it comes to loan repayment.
12. Budget – Shows exactly how much money you have and where it’s being spent. It allows a person to find ways in which they can save money and plan for the future.
13. Certificate of Deposit – A savings account for a specified period of time with a higher interest rate.
14. Money Market – A savings account that pays a higher interest rate, but requires a higher balance. In some instances, money market accounts have other restrictions as well.
15. Term Life Insurance – Insurance coverage over a set period of time. If you die within the set term, your beneficiaries receive a payout.
16. Umbrella Insurance – Provides additional liability insurance beyond what home or auto insurance can.
ACCC is a 501(c)3 organization that provides free credit counseling, bankruptcy counseling, and housing counseling to consumers nationwide in need of financial literacy education and money management. For more information, contact ACCC:
- For credit counseling and student loan counseling, call 800-769-3571
- For bankruptcy counseling, call 866-826-6924
- For housing counseling, call 866-826-7180
- Or visit us online at http://www.ConsumerCredit.com
About American Consumer Credit Counseling
American Consumer Credit Counseling (ACCC) is a nonprofit credit counseling 501(c)(3) organization dedicated to empowering consumers to achieve financial management through credit counseling, debt management, bankruptcy counseling, housing counseling, student loan counseling and financial education concerning debt solutions. To help consumers reach their goal of debt relief, ACCC provides a range of free consumer personal finance resources on a variety of topics including budgeting, credit and debt management, student loan assistance, youth and money, homeownership, identity theft, senior living, and retirement. Consumers can use ACCC’s worksheets, videos, calculators, and blog articles to make the best possible decisions regarding their financial future. ACCC holds an A+ rating with the Better Business Bureau and is a member of the National Foundation for Credit Counseling® (NFCC®). For more information or to access free financial education resources, log on to ConsumerCredit.com or visit http://www.consumercredit.com/financial-education.aspx