Vocabulary

• Asset – Anything of value that can be turned into cash.
• Balance Sheet – A financial statement that shows assets, liabilities, and net worth.
• Budget – A plan of how you will spend the money that you make or receive.
• Capital – Wealth in the form of money or other assets.
• Debt – Money that is owed or due.
• Equity – The value of an asset after deducting the amount of all liabilities.
• Finance – The management of large amounts of money, especially by governments or large companies.
• Gross Income – The total income from all sources before taxes or deductions.
• Net Income – Gross income after taxes and deductions have been taken out.
• Investment – The act of putting money or effort into something to make a profit or achieve a result.
• Liability – A debt or obligation that must be met.
• Mutual Fund – An investment program funded by shareholders that trades in diversified holdings.
• Pension Plan – A type of retirement plan, often tax exempt, wherein an employer makes contributions toward a pool of funds set aside for an employee's future benefit.
• Portfolio – A range of investments held by a person or organization.
• Savings Account – A bank account that earns interest.
• Tax – A compulsory contribution to state revenue, levied by the government.
• Yield – The income return on an investment.
• Credit Score – A number assigned to a person that indicates to lenders their capacity to repay a loan.
• Insurance – A contract in which an individual or entity receives financial protection against losses from an insurance company.
• Interest Rate – The proportion of a loan that is charged as interest to the borrower.
• 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.
• Diversification – The process of allocating capital in a way that reduces the exposure to any one particular asset or risk.
• Bonds – A fixed income instrument that represents a loan made by an investor to a borrower.
• Stocks – A type of investment that represents an ownership share in a company.
• Exchange Rate – The value of one currency for the purpose of conversion to another.
• Inflation – The rate at which the general level of prices for goods and services is rising.
• Recession – A period of temporary economic decline.
• Bankruptcy – Legal status of a person or other entity that cannot repay debts to creditors.
• Loan – A thing that is borrowed, especially a sum of money that is expected to be paid back with interest.
• Retirement – The action or fact of leaving one's job and ceasing to work.
• Dividends – A sum of money paid regularly by a company to its shareholders out of its profits.
• Annuity – A fixed sum of money paid to someone each year, typically for the rest of their life.
• Estate Planning – The preparation of tasks that serve to manage an individual's asset base in the event of their incapacitation or death.
• Cash Flow – The total amount of money being transferred into and out of a business.
• Capital Gain – A profit from the sale of property or an investment.
• Depreciation – A reduction in the value of an asset over time.
• Revenue – Income, especially when of a company or organization and of a substantial nature.
• Profit – A financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something.
• Risk – A situation involving exposure to danger.
• Liability Insurance – Insurance that protects against claims resulting from injuries and damage to people or property.
• Health Insurance – Insurance coverage that pays for medical and surgical expenses incurred by the insured.
• Life Insurance – A contract with an insurance company that, in exchange for regular premiums, pays a sum of money upon the death of the insured person.
• Fixed Costs – Business expenses that are not dependent on the level of goods or services produced.
• Variable Costs – Costs that change in proportion to the good or service that a business produces.
• Interest – Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.
• Principal – The original sum of money borrowed in a loan, or put into an investment.
• Credit Card – A small plastic card issued by a bank, business, etc., allowing the holder to purchase goods or services on credit.
• Debit Card – A card issued by a bank allowing the holder to transfer money electronically to another bank account when making a purchase.
• Financial Advisor – A professional who provides financial services to clients based on their financial situation.