Vocabulary

• Budget – A plan that outlines your income and expenditures over a defined period, helping you allocate your money effectively.
• Savings Account – A bank account where you can store money while earning a modest amount of interest.
• Expenses – The cost required for something; the money spent on something.
• Disposable Income – The amount of money that a person or household has to spend or save after taxes have been paid.
• Fixed Expenses – Costs that do not change from month to month, such as rent or a car payment.
• Variable Expenses – Costs that can change from month to month, like groceries or utility bills.
• Emergency Fund – A savings account set aside to cover unexpected expenses or financial emergencies.
• Debt – Money that is owed or due.
• Interest Rate – The amount a lender charges for the use of assets expressed as a percentage of the principal.
• Credit Score – A numerical expression of a person's creditworthiness, based on an analysis of their credit files.
• Retirement Fund – A pool of funds set aside for retirement, often in investment accounts like a 401(k) or IRA.
• Compound Interest – The addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest.
• Investment – An asset or item acquired with the goal of generating income or appreciation.
• Frugality – The quality of being economical with money or food; thriftiness.
• Inflation – The rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.
• Tax – A mandatory financial charge imposed by a government to fund public expenditures.
• Mortgage – A loan used to purchase or secure a home.
• Insurance – A contract in which an individual or entity receives financial protection against losses from an insurance company.
• Diversification – The practice of spreading investments among different securities to reduce risk.
• Equity – Ownership interest in a corporation in the form of stock.
• Liquidity – The degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price.
• Depreciation – The decrease in the value of an asset over time.
• Appreciation – An increase in the value of an asset over time.
• Dividend – A distribution of a portion of a company's earnings to its shareholders.
• Bonds – A fixed income instrument representing a loan made by an investor to a borrower.
• Stocks – Securities that represent ownership in a corporation and constitute a claim on part of the corporation's assets and earnings.
• Mutual Funds – Investment vehicles that pool money from many investors to purchase securities like stocks, bonds, and other assets.
• ETFs – Exchange-traded funds that track an index, sector, commodity, or other assets.
• Portfolio – A collection of investments owned by an individual or an institution.
• Capital Gain – A rise in the value of a capital asset that gives it a higher worth than the purchase price.
• Capital Loss – The loss incurred when a capital asset decreases in value.
• Annuity – A financial product that pays out a fixed stream of payments to an individual, primarily used as an income stream for retirees.
• Pension – A fund into which a sum of money is added during an employee's employment years and from which payments are drawn to support the person's retirement.
• 401(k) – A retirement savings plan sponsored by an employer which allows employees to save and invest a piece of their paycheck before taxes are taken out.
• IRA – Individual Retirement Account, a tax-advantaged investing tool that individuals use to earmark funds for retirement savings.
• Roth IRA – An individual retirement account allowing a person to set aside after-tax income up to a specified amount each year.
• Broker – An individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor.
• Financial Advisor – A professional who provides financial services to clients based on their financial situation.
• Leverage – The use of borrowed money to increase the potential return of an investment.
• Futures – Financial contracts obligating the buyer to purchase an asset or the seller to sell an asset at a predetermined future date and price.
• Options – Financial derivatives that represent a contract sold by one party to another offering the buyer the right, but not the obligation, to buy or sell a security at an agreed-upon price during a certain period.
• Commodities – Basic goods used in commerce that are interchangeable with other goods of the same type.
• Forex – The foreign exchange market where currencies are traded.
• Cryptocurrencies – Digital or virtual currencies that use cryptography for security and operate independently of a central bank.
• Peer-to-Peer Lending – The practice of lending money to individuals or businesses through online services that match lenders with borrowers.
• Crowdfunding – The practice of funding a project or venture by raising small amounts of money from a large number of people, typically via the Internet.
• Budget Deficit – A financial situation that occurs when an entity spends more money than it takes in.
• Fiscal Policy – The use of government revenue collection and expenditure to influence a country's economy.
• Monetary Policy – The policy adopted by the monetary authority of a country that controls either the interest rate payable on very short-term borrowing or the money supply.
• Credit Card – A payment card issued to users to enable the cardholder to pay a merchant for goods and services based on the cardholder's promise to the card issuer to pay them for the amounts plus the other agreed charges.