Financial Glossary

A simple budget split: 50% needs, 30% wants, 20% savings and debt.

Paying off a loan through regular equal payments split between interest and principal.

The yearly cost of borrowing money, including interest and most fees.

The yearly return on savings, including the effect of compounding.

Anything you own that has monetary value.

A recurring, scheduled move of money between accounts that runs on its own.

A plan for your money that tells every dollar where to go before the month starts.

Budgeting with physical cash divided into labeled envelopes by category.

Interest earned on both your original money and the interest it has already earned.

How much money it takes to cover basic expenses in a given place.

A three-digit number lenders use to judge how likely you are to repay borrowed money.

The share of your available credit that you are currently using.

A payoff strategy that targets your highest-interest debt first to save the most money.

A payoff strategy that targets your smallest debt balance first for quick wins.

The share of your monthly income that goes toward debt payments.

Having your pay sent electronically straight into your bank account.

Money spent on wants rather than needs.

Cash set aside to cover surprise expenses without going into debt.

Having enough income or savings to cover your expenses without needing to work.

Regular costs that stay roughly the same amount every month.

Being deliberate and value-focused with spending, not simply cheap.

Your total pay before any taxes or deductions are taken out.

A savings account that pays much more interest than a standard bank account.

The gradual rise in prices that reduces what each dollar can buy over time.

The percentage a lender charges to borrow, or a bank pays to save.

Any debt or financial obligation you owe.

The tendency to spend more as you earn more, so raises never turn into wealth.

How quickly an asset can be turned into cash without losing value.

The smallest amount you can pay on a debt to keep it in good standing.

Everything you own minus everything you owe.

Spending more than your account holds, leaving a negative balance.

Saving a set amount the moment you get paid, before spending on anything else.

The original amount of money borrowed or invested, before interest.

The percentage of your income you keep instead of spend.

Money saved a little at a time for a known, planned future expense.

The money that actually lands in your account after taxes and deductions.

Costs that change from month to month based on your choices and usage.

A sudden, often one-time sum of money you did not plan on.

A budgeting method where income minus every assigned dollar equals zero.