Page 85 - Book2E
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CHAPTER 9
Glossary of Terms
Annuity: contract with an insurance company in which you contrib- ute a lump sum or a series of payments, and the contract guarantees payments will be made to you for life or over a specific time.
Budget: a spending plan used to allocate resources; a plan for the coordination of monthly income and expenses; the amount of money that is assigned to a particular purpose.
Commodity: an economic good; something useful or valued, e.g., corn, paper, gasoline, precious gems.
Compound Interest: interest computed on the sum of an original principal and accrued interest.
Deduction: an act of taking away; something that is or may be subtracted from taxable income, e.g., federal income tax.
Deficit: an excess of spending over income; in personal and business operations, creating a loss.
Defined Benefit Plan: managed by your employer, a Defined Benefit Plan guarantees you a specific amount when you retire which is usually paid in monthly checks for as long as you live.
Discretionary Expenses: expenses which are optional such as gifts, vacations, or entertainment.
Expenditures: the act or process of spending; income should exceed spending.
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