Vocabulary

• Budget – A plan that outlines an individual's or entity's financial operations for a specific period.
• Credit Score – A numerical expression based on credit information representing the creditworthiness of an individual.
• Debt – Money that is owed or due.
• Savings – The portion of income not spent on current expenditures.
• Interest – The charge for the privilege of borrowing money, typically expressed as an annual percentage rate.
• Investment – The action or process of investing money for profit.
• Financial Planning – The process of determining a person's financial goals and creating a plan to achieve them.
• Income – Money received, especially on a regular basis, for work or through investments.
• Expenses – The cost required for something; the money spent on something.
• Financial Security – The peace of mind felt when we aren't worried about being able to afford life's necessities.
• Tax – A compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization.
• Mortgage – A loan secured by real property through the use of a mortgage note.
• Insurance – A contract in which an individual or entity receives financial protection or reimbursement against losses.
• Retirement – The action or fact of leaving one's job and ceasing to work.
• 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.
• Financial Independence – The status of having enough income to pay one's living expenses for the rest of one's life without having to be employed or dependent on others.
• 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 – A company's legal financial debts or obligations that arise during the course of business operations.
• Equity – The ownership interest of investors in a company or property.
• Bankruptcy – A legal proceeding involving a person or business that is unable to repay their outstanding debts.
• Loan – A sum of money that is expected to be paid back with interest.
• Credit – The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.
• Financial Risk – The possibility that shareholders or other financial stakeholders will lose money when they invest in a company that has debt, if the company's cash flow proves inadequate to meet its financial obligations.
• Inflation – The rate at which the general level of prices for goods and services is rising and, subsequently, purchasing power is falling.
• Deflation – The decrease in the general price level of goods and services.
• Recession – A significant decline in economic activity spread across the economy, lasting more than a few months.
• Economy – The wealth and resources of a country or region, especially in terms of the production and consumption of goods and services.
• Financial Market – A market in which people trade financial securities and derivatives at low transaction costs.
• Stock – The capital raised by a corporation through the issue of shares entitling holders to an ownership interest.
• Bond – A fixed income instrument that represents a loan made by an investor to a borrower.
• Dividend – A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
• Capital Gain – An increase in the value of a capital asset that gives it a higher worth than the purchase price.
• Mutual Fund – An investment vehicle made up of a pool of money collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and other assets.
• Portfolio – A range of investments held by an individual or organization.
• Diversification – The process of allocating capital in a way that reduces the exposure to any one particular asset or risk.
• Liquidity – The degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price.
• Exchange Rate – The value of one currency for the purpose of conversion to another.
• Fiscal Policy – The means by which a government adjusts its spending levels and tax rates to monitor and influence a nation's economy.
• Monetary Policy – The process by which the monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.
• Financial Advisor – A professional who provides financial services to clients based on their financial situation.
• Hedge Fund – A limited partnership of investors that uses high risk methods, such as investing with borrowed money, in hopes of realizing large capital gains.
• Private Equity – Capital that is not noted on a public exchange.
• Venture Capital – A type of private equity capital typically provided for early-stage, high-potential, growth companies in the interest of generating a return through an eventual exit strategy.
• Financial Leverage – The use of borrowed money (debt) to finance the purchase of assets, with the expectation that the income or capital gain from the new asset will exceed the cost of borrowing.
• Financial Institution – An establishment that focuses on dealing with financial transactions, such as investments, loans, and deposits.
• Financial Literacy – The ability to understand and use various financial skills, including personal financial management, budgeting, and investing.
• Cash Flow – The total amount of money being transferred into and out of a business, especially as affecting liquidity.
• Exchange Traded Fund (ETF) – An investment fund traded on stock exchanges, much like stocks.
• Real Estate – Property consisting of land or buildings.
• Consumer Price Index (CPI) – A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.