Vocabulary

• Financial Literacy – Knowledge and understanding of various financial areas including topics related to managing personal finance, money, borrowing, and investing.
• Budget – An estimation of revenue and expenses over a specified future period of time.
• Savings Account – A bank account where you can store money while earning interest.
• Checking Account – A bank account which allows frequent transactions, including deposits and withdrawals.
• Credit Card – A plastic card issued by a bank, business, etc., for the purchase of goods or services on credit.
• Debit Card – A card issued by a bank allowing the holder to transfer money electronically from their bank account when making a purchase.
• Interest Rate – The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.
• Loans – A sum of money that is expected to be paid back with interest.
• Mortgage – A legal agreement by which a bank or other creditor lends money at interest in exchange for taking title of the debtor's property.
• Stock Market – A market in which securities are bought and sold.
• Bonds – A debt security, similar to an IOU. The borrower is obliged to pay back the loan and interest.
• Mutual Funds – An investment program funded by shareholders that trades in diversified holdings and is professionally managed.
• ETFs (Exchange-Traded Funds) – An investment fund and exchange-traded product, which is similar to a mutual fund but can be bought and sold throughout the day like stocks.
• Retirement Plan – A financial arrangement designed to replace employment income upon 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.
• Insurance – A contract which provides compensation for specified loss, damage, illness, or death in return for payment.
• Life Insurance – A contract between an insurer and a policyholder, where the insurer guarantees payment of a death benefit to named beneficiaries upon the death of the insured.
• Health Insurance – A type of insurance coverage that pays for medical and surgical expenses incurred by the insured.
• Auto Insurance – A policy purchased by vehicle owners to mitigate costs associated with getting into an auto accident.
• Homeowner's Insurance – A form of property insurance that covers losses and damages to an individual's house and assets in the home.
• Renters Insurance – A form of property insurance that provides coverage for a policy holder's belongings and liability within a rental property.
• Tax – A mandatory financial charge imposed by a government to fund various public expenditures.
• Income Tax – A tax imposed on individuals or entities that varies with respective income or profits.
• Sales Tax – A tax paid to a governing body for the sales of certain goods and services.
• Property Tax – A levy on property that the owner is required to pay.
• Estate Tax – A tax on the right to transfer property at the owner's death.
• Capital Gains Tax – A tax on the profit that a person realizes when he sells a capital asset for a price that is higher than the purchase price.
• Inflation – The rate at which the general level of prices for goods and services is rising and subsequently, purchasing power is falling.
• Deflation – A decrease in the general price level of goods and services.
• Recession – A period of temporary economic decline during which trade and industrial activity are reduced.
• Economic Depression – A long and severe recession in an economy or market.
• GDP (Gross Domestic Product) – The total value of goods produced and services provided in a country during one year.
• 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.
• Fiscal Policy – The means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy.
• Federal Reserve – The central banking system of the United States.
• Central Bank – A national bank that provides financial and banking services for its country's government and commercial banking system.
• Currency – A system of money in general use in a particular country.
• Exchange Rate – The value of one currency for the purpose of conversion to another.
• Cryptocurrency – A digital or virtual form of currency that uses cryptography for security.
• Blockchain – A system in which a record of transactions made in bitcoin or another cryptocurrency are maintained across several computers that are linked in a peer-to-peer network.
• Diversification – The strategy of investing in a variety of securities in order to lower risk.
• Risk Tolerance – The degree of variability in investment returns that an investor is willing to withstand.
• Asset Allocation – An investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance, and investment horizon.
• Compound Interest – The addition of interest to the principal sum of a loan or deposit, or in other words, interest on interest.
• Liquidity – The availability of liquid assets to a market or company.
• Net Worth – The amount by which assets exceed liabilities.
• Collateral – Something pledged as security for repayment of a loan, to be forfeited in the event of a default.
• Financial Advisor – A professional who provides financial services to clients based on their financial situation.
• Bankruptcy – A legal status of a person or other entity that cannot repay debts to creditors.