Vocabulary

• Assets – Anything of value that an individual, business or corporation owns.
• Liabilities – Debts or financial obligations a person or a company owes.
• Net Worth – The difference between an individual's total assets and total liabilities.
• Budget – An estimation of income and expenditure for a set period of time.
• Income – Money that an individual or business receives in exchange for providing a good or service.
• Expense – The cost of goods purchased or services used in a period of time.
• Savings – Money set aside for future use, often with the help of a high-interest savings account.
• Investment – The purchase of goods that are not consumed today but are used to create wealth.
• Debt – Money borrowed from another party, often to make large purchases that one could not afford upfront.
• Interest – The cost of borrowing money, usually expressed as a percentage of the amount borrowed.
• Mortgage – A loan taken out to buy property or land.
• Loan – A sum of money that is expected to be paid back with interest.
• Credit Score – A numerical expression of a person's creditworthiness, based on an analysis of their credit files.
• Bankruptcy – A legal status of a person or other entity who cannot repay their debts to creditors.
• Equity – The value of an asset after all debts associated with that asset are paid off.
• Insurance – A contract that provides compensation for specific loss, damage, illness, or death in return for payment.
• Retirement Plan – A financial arrangement designed to replace employment income upon retirement.
• Tax – A compulsory contribution to state revenue, levied by the government on workers' income and business profits.
• Pension – A regular payment made by the state or a private company to someone who has retired.
• Dividend – A portion of a company’s earnings that is paid to shareholders.
• Bonds – A type of investment that involves lending money to an institution in exchange for periodic interest payments.
• Stocks – A type of investment that signifies ownership in a corporation.
• Mutual Funds – An investment vehicle made up of a pool of money collected from many investors.
• Portfolio – A range of investments held by a person or organization.
• Capital Gain – The rise in value of a capital asset.
• Capital Loss – The decrease in value of an investment or real estate.
• Inflation – The rate at which the general level of prices for goods and services is rising.
• Deflation – The decrease in the general price level of goods and services.
• Risk Tolerance – The degree of variability in investment returns that an investor is willing to withstand.
• Diversification – The strategy of investing in a variety of different assets to reduce risk.
• Liquidity – The ease with which an asset, or security, can be converted into cash.
• Financial Plan – A comprehensive evaluation of an individual's current and future financial state.
• Broker – An individual or firm that charges a fee or commission for executing buy and sell orders.
• Bull Market – A market in which share prices are rising, encouraging buying.
• Bear Market – A market in which prices are falling, encouraging selling.
• Exchange Rate – The value of one currency for the purpose of conversion to another.
• Recession – A period of temporary economic decline.
• Fiscal Policy – The use of government revenue collection and expenditure to influence a country's economy.
• Monetary Policy – The process by which the monetary authority of a country controls the supply of money.
• Credit Card – A card issued by a bank 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 from their bank account.
• Checking Account – A bank account where you can write checks to withdraw your deposited money.
• Savings Account – A bank account where you can accrue interest on the money you've deposited.
• Fixed Interest Rate – An interest rate that does not change over the period of the loan.
• Variable Interest Rate – An interest rate that can change over the period of the loan.
• Compound Interest – The addition of interest to the principal sum of a loan.
• Simple Interest – Interest computed only on the principal amount.
• Leverage – The strategy of using borrowed money to increase return on an investment.
• Hedge – An investment to reduce the risk of adverse price movements in an asset.
• Return on Investment (ROI) – A performance measure used to evaluate the efficiency of an investment.