Financial Glossary
Plain-English definitions of the budgeting, saving, debt, and investing terms that actually come up when you manage money. No jargon, no fluff.
5
A
Amortization
Paying off a loan through regular equal payments split between interest and principal.
APR (Annual Percentage Rate)
The yearly cost of borrowing money, including interest and most fees.
APY (Annual Percentage Yield)
The yearly return on savings, including the effect of compounding.
Asset
Anything you own that has monetary value.
Automatic Transfer
A recurring, scheduled move of money between accounts that runs on its own.
B
C
Cash Stuffing (Envelope System)
Budgeting with physical cash divided into labeled envelopes by category.
Compound Interest
Interest earned on both your original money and the interest it has already earned.
Cost of Living
How much money it takes to cover basic expenses in a given place.
Credit Score
A three-digit number lenders use to judge how likely you are to repay borrowed money.
Credit Utilization
The share of your available credit that you are currently using.
D
Debt Avalanche
A payoff strategy that targets your highest-interest debt first to save the most money.
Debt Snowball
A payoff strategy that targets your smallest debt balance first for quick wins.
Debt-to-Income Ratio (DTI)
The share of your monthly income that goes toward debt payments.
Direct Deposit
Having your pay sent electronically straight into your bank account.
Discretionary Spending
Money spent on wants rather than needs.