Asset
A resource you own that has economic value, such as cash, a car or a stock portfolio.
Liability
An obligation that requires future payment, for example a credit card balance or a mortgage.
Net worth
The difference between total assets and total liabilities; a snapshot of financial health.
Cash flow
The amount of money moving in and out of your accounts each month, expressed as inflow minus outflow.
Budget
A plan that assigns each dollar a purpose, often built around categories like housing, food and savings.
Emergency fund
Cash set aside for unexpected costs, typically three to six months of living expenses kept in a liquid account.
Debt
Money borrowed that must be repaid with interest, ranging from student loans to credit card balances.
Interest
The cost of borrowing or the earnings on saved money, usually quoted as an annual percentage.
APR
Annual Percentage Rate, the total cost of credit including interest and fees expressed yearly.
Credit score
A three‑digit number that predicts credit risk; scores above 740 are considered excellent.
Credit report
A detailed record of your borrowing history, payment patterns and public records.
Mortgage
A long‑term loan secured by real estate, commonly repaid over 15 or 30 years.
Rent
Periodic payment for the right to occupy a dwelling you do not own.
Home equity
The market value of a house minus any outstanding mortgage balance.
Savings account
A deposit account that earns modest interest and offers easy access to funds.
Checking account
A transaction‑focused account used for daily spending, often with no interest.
Certificate of deposit
A time‑bound deposit that pays a fixed rate; withdrawing early usually incurs a penalty.
Money market account
A savings vehicle that offers higher rates than a regular account while allowing limited check writing.
Investment
Allocation of money to assets with the expectation of future return.
Stock
A share of ownership in a corporation; price changes reflect market expectations.
Bond
A debt instrument issued by governments or corporations that pays periodic interest.
Mutual fund
A pooled investment managed by professionals, offering diversification through a single purchase.
ETF
Exchange Traded Fund, trades like a stock but holds a basket of assets.
Index fund
A type of fund that tracks a market index, often with low fees.
Dividend
A cash payment to shareholders, typically expressed as a percentage of the share price.
Capital gain
Profit realized when an asset is sold for more than its purchase price.
Tax advantaged
Accounts that provide tax breaks, such as pretax contributions or tax‑free growth.
401k
A workplace retirement plan allowing pretax contributions up to a statutory limit.
Roth IRA
An individual retirement account funded with after‑tax dollars; qualified withdrawals are tax free.
Traditional IRA
An individual retirement account that may provide a tax deduction on contributions.
Contribution limit
The maximum amount you may deposit into a retirement account each year, set by the IRS.
Withdrawal penalty
A surcharge, usually 10 percent, applied to early distributions from tax‑advantaged accounts.
Roth conversion
Moving pretax funds into a Roth IRA, paying tax at conversion but gaining future tax‑free growth.
Expense ratio
The annual fee expressed as a percentage of fund assets; lower ratios mean more of your money stays invested.
Management fee
Compensation paid to a fund manager for overseeing investments.
Liquidity
How quickly an asset can be turned into cash without losing value.
Diversification
Spreading investments across assets to reduce risk.
Asset allocation
Dividing a portfolio among categories such as stocks, bonds and cash based on risk tolerance.
Risk tolerance
The degree of market fluctuation you are comfortable enduring.
Rebalancing
Adjusting holdings to restore target allocation after market moves.
Compound interest
Earnings on both principal and accumulated interest, driving exponential growth over time.
Inflation
The general rise in prices that erodes purchasing power.
Real return
Investment return after subtracting inflation.
Passive income
Cash flow generated with minimal ongoing effort, such as dividends or rental receipts.
Side hustle
Extra work outside a primary job that adds to earnings.
Gross income
Total earnings before taxes and deductions.
Net income
Earnings left after taxes and required deductions.
Taxable income
Portion of income subject to tax after deductions.
Standard deduction
A fixed amount the IRS allows you to subtract from gross income.
Itemized deduction
Specific expenses you list to lower taxable income, such as mortgage interest.
Tax credit
A dollar‑for‑dollar reduction of tax liability, often more valuable than a deduction.
Tax bracket
The range of income taxed at a specific marginal rate.
Capital loss
A loss realized when an asset is sold for less than its purchase price.
Wash sale
A rule that disallows a tax deduction if you repurchase a substantially identical security within 30 days.
Roth 401k
A workplace retirement plan that accepts after‑tax contributions, offering tax‑free withdrawals.
Health savings account
A pretax account paired with a high‑deductible health plan, used for qualified medical expenses.
Flexible spending account
A pretax account for eligible health or dependent‑care costs.
Dependent care account
A pretax fund used to pay for child or elder care expenses.
Retirement age
The age at which you can begin drawing from retirement accounts without early‑withdrawal penalties, typically 59½.
Social security
A federal program providing retirement and disability benefits based on earnings history.
Pension
A defined benefit plan that pays a set amount after retirement.
Annuity
A contract that provides periodic payments, often used for lifetime income.
Beneficiary
The person or entity designated to receive assets from an account or policy.
Estate tax
A federal tax on the transfer of wealth at death, applicable above a high exemption threshold.
Will
A legal document that states how assets should be distributed after death.
Trust
A fiduciary arrangement that holds assets for designated beneficiaries.
Power of attorney
Legal authority granted to someone to act on your financial or health matters.
Insurance premium
The amount you pay, usually monthly or annually, for coverage.
Deductible
The out‑of‑pocket amount you must pay before insurance begins covering costs.
Copay
A fixed fee you pay at the time of a medical service.
Out of pocket
Expenses you pay directly, not covered by insurance or reimbursement.
Life insurance
A contract that pays a death benefit to beneficiaries upon the insured’s passing.
Term life
Life insurance that provides coverage for a set period, typically at low cost.
Whole life
Permanent life insurance that builds cash value over time.
Disability insurance
Coverage that replaces a portion of income if you cannot work due to injury or illness.
Long term care
Insurance that helps pay for extended care services, such as nursing homes.
Credit utilization
The ratio of credit card balances to credit limits; staying below 30 percent is generally advised.
Debt to income ratio
The percentage of monthly gross income that goes toward debt payments; lenders often look for a ratio below 36 percent.
Secured loan
A loan backed by collateral, such as a car loan.
Unsecured loan
A loan without collateral, like most credit cards.
Refinance
Replacing an existing loan with a new one, usually to obtain a lower rate.
Amortization
The process of paying off a loan through scheduled principal and interest payments.
Fixed rate
An interest rate that does not change over the life of a loan.
Variable rate
An interest rate that can adjust based on market indices.
Grace period
The time after a billing cycle during which you can pay a balance without incurring interest.
Late fee
A charge applied when a payment is missed after the due date.
Overdraft
When withdrawals exceed the available balance, often resulting in a fee.
Chargeback
A reversal of a credit card transaction initiated by the cardholder’s bank.
Reward points
Points earned on purchases that can be redeemed for travel, merchandise or cash.
Cash back
A percentage of spend returned to the cardholder as a statement credit.
Annual fee
A yearly charge for holding a credit card, justified by higher rewards or perks.
Balance transfer
Moving debt from one credit card to another, often to take advantage of a lower rate.
Credit limit
The maximum amount a lender allows you to borrow on a credit card.
Credit inquiry
A request to view your credit report; can be hard (impacting score) or soft (no impact).
Hard inquiry
A credit check that may lower your score slightly, typically triggered by loan applications.
Soft inquiry
A credit check that does not affect your score, such as a pre‑approval check.
Credit freeze
A tool that blocks new credit accounts from being opened in your name.
Identity theft
Unauthorized use of personal information to open accounts or commit fraud.
Fraud alert
A notice placed on your credit file to warn lenders of possible theft.
Financial goal
A measurable objective, such as saving $10,000 for a down payment within three years.
Sinking fund
A dedicated savings pool for a future expense, like a car purchase.
Savings rate
The percentage of after‑tax income you set aside for future use.
Spend analysis
Reviewing transaction data to identify spending patterns and potential cuts.
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