Vocabulary

• Budget – A plan that outlines an individual's or organization's financial and operational goals.
• Income – The financial gain (earned or unearned) accruing over a given period of time.
• Expenses – The cost required for something; the money spent on something.
• Savings – The portion of income not spent on current expenditures.
• Debt – Money that is owed or due.
• Credit – The ability of a customer to obtain goods or services before payment.
• Investment – The action or process of investing money for profit or material result.
• Assets – A resource with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide a future benefit.
• Liabilities – The debts or obligations of a person or business.
• Equity – The value of an asset after deducting the amount of all liabilities.
• Fixed Costs – Costs that do not change with the level of output or activity.
• Variable Costs – Costs that vary depending on a company's production volume.
• Cash Flow – The total amount of money being transferred into and out of a business.
• Net Worth – The total assets minus total outside liabilities of an individual or a company.
• Interest Rate – The proportion of a loan that is charged as interest to the borrower.
• Inflation – The rate at which the general level of prices for goods and services is rising.
• Deflation – The reduction of the general level of prices in an economy.
• Recession – A period of temporary economic decline during which trade and industrial activity are reduced.
• Bull Market – A market in which share prices are rising, encouraging buying.
• Bear Market – A market in which prices are falling, encouraging selling.
• Diversification – The process of allocating capital in a way that reduces the exposure to any one particular asset or risk.
• Risk Tolerance – The degree of variability in investment returns that an investor is willing to withstand.
• Capital – Wealth in the form of money or other assets owned by a person or organization or available for a purpose such as starting a company or investing.
• Returns – The profit or income generated by saving and investing.
• Bankruptcy – Legal status of a person or other entity that cannot repay debts to creditors.
• Insurance – A contract in which an individual or entity receives financial protection or reimbursement against losses.
• Pension – A regular payment made during a person's retirement from an investment fund to which that person or their employer has contributed during their working life.
• Mortgage – A legal agreement by which a bank lends money at interest in exchange for taking title of the debtor's property.
• Leverage – The use of borrowed money to increase the potential return of an investment.
• Dividend – A sum of money paid regularly by a company to its shareholders out of its profits.
• Bond – A fixed income instrument that represents a loan made by an investor to a borrower.
• Stock – A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.
• ETF – An Exchange-Traded Fund, a type of investment fund and exchange-traded product.
• Mutual Fund – An investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities.
• Index Fund – A type of mutual fund with a portfolio constructed to match or track the components of a financial market index.
• Retirement Fund – A fund set up by an individual or a company to meet retirement income goals.
• Tax – A compulsory contribution to state revenue, levied by the government on workers' income and business profits.
• Deduction – An amount that can be subtracted from gross income to reduce the total that is subject to tax.
• Credit Score – A number assigned to a person that indicates to lenders their capacity to repay a loan.
• Loan – A thing that is borrowed, especially a sum of money that is expected to be paid back with interest.
• Financial Planner – A professional who helps individuals and corporations meet their long-term financial objectives.
• Broker – An individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor.
• Portfolio – A range of investments held by a person or organization.
• Liquidity – The availability of liquid assets to a market or company.
• Depreciation – A reduction in the value of an asset over time.
• Amortization – The process of reducing a debt through regular payments over time.
• Compound Interest – The addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest.
• Annuity – A fixed sum of money paid to someone each year, typically for the rest of their life.
• Hedge – An investment to reduce the risk of adverse price movements in an asset.
• Arbitrage – The simultaneous purchase and sale of an asset to profit from a difference in the price.