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Financial Literacy By Smrithi Prasath - Coggle Diagram
Financial Literacy By Smrithi Prasath
Financial literacy is the ability to make smart money decisions.
Why financial literacy?
Gaining knowledge about asset management fundamentals can lead to numerous advantages such as increased wealth and wise investment choices.
Deeds
Debt is the amount of money that a borrower owes to a lender, which can be incurred through various borrowing methods, such as credit cards, mortgages, personal loans, or auto loans.
Banking
Expenditure refers to a payment made, either in cash or credit, to acquire goods or services. It is recorded at the time of purchase.
Savings are money set aside in a secure place for future use.
Investing - is the practice of putting money into financial assets, property, or businesses with the aim of generating a profit.
Earned income encompasses all monetary compensation received for working, including wages, salaries, tips, and earnings from running a business or farm.
Credit is borrowing money, often through a credit card, to make purchases or obtain funds. It can also refer to obtaining funds through a loan.
A credit card is a loan with a set limit that allows you to carry over unpaid balances and make minimum monthly payments, but incurs interest charges.
A debit card is a plastic card that allows you to make purchases at various businesses such as grocery stores and gas stations, using funds directly from your checking account.
Emergency funds
An emergency fund is savings set aside to cover significant and unforeseen expenses like sudden unemployment or substantial medical bills. It acts as a financial cushion to prevent accumulating unwanted debt.
APR (Annual Percentage Rate) is the yearly interest rate that is charged when you borrow money. It is shown as a percentage and tells you how much you'll need to pay in interest over the course of a year.
Interest is the percentage of a loan principal that lenders charge borrowers.
Simple interest
Compound Interest
The Time Value of Money (TVM) refers to the idea that money available now is worth more than the same amount in the future, as money invested sooner has more time to grow.
Components of FL
Budgeting
Budgeting involves developing a spending plan, which entails balancing your income with your expenses.
Investing
Investing involves allocating funds towards financial instruments, shares, property, or business endeavors, with the anticipation of generating a financial gain.
Saving
An amount of money that is reserved in a safe location, such as a bank account, for unforeseen circumstances or planned expenses.
