Key terms you need to know in your daily financial life.

Personal finance isn’t something most of us learn about in school. You pick up things as you go through life and usually learn by trial and error. As a result, it can happen that you run across a word in your financial life that you don’t know. So instead of leaving you to guess what we mean we use certain words throughout this website, we’ve put together a glossary of the terms we use (and other terms you’ll run across) so you can understand things better and make the right choices to reach your financial goals.

If you have questions or you’re having an issue with debt, call us or complete the form to connect with the solutions you need.

1-9 A B C D E F G H I J K L M N O P Q R S T U V W X Y Z


401(k): This is a retirement plan offered through an employer where you set up recurring contributions from your pre-tax income into a retirement account. The employer may “match” contributions up to a certain amount or percentage, meaning they contribute a certain amount for every dollar you put in. Withdrawals from a 401(k)can begin at age 59.5.

501(c)(3): This is a designation that denotes a nonprofit organization. Companies that offer financial assistance are usually more impartial if they’re a 501(c)(3) because their profits are not tied to promoting a single solution that they offer.  

529 college savings plan: This is the most common type of college savings plan parents can use to save up for their children’s education. The programs are run by states and educational institutions, but the money saved can usually be used even if your child decides to go out-of-state or to another school. There are usually tax benefits for putting money into this plan.


Accountant: A professional money manager who can help you with all or part of your personal financial management strategy. If you choose to retain an accountant, make sure they are certified (i.e. a Certified Public Accountant or CPA). You can use an accountant to provide assistance in general, or for a specific purpose such as filing your taxes or finding the right debt solution.

Annual feeEvery credit card has an annual fee that requires you to pay a certain amount per year to use that credit card. Make sure to pay attention to these fees when selecting a new credit card.

Adjustable rate: This is an interest rate that is not fixed or set at a certain amount. It adjusts at least once or at regular intervals. This means your interest rate may be higher or lower based on certain economic indicators. This is commonly seen with loans, such as an Adjustable-Rate Mortgage (ARM); these loans are often considered riskier than a fixed-rate option.

Annual interest rate: This is the interest rate applied to your debt over a twelve month period. It may include fees that are applied to your debt or the account. Also called the “annual percentage rate” (APR). The periodic interest rate applied to your balance every month on a credit card can be determined by dividing the APR by twelve.

Appreciation: The measurable increase in value of an asset over time. Some assets increase in value as time passes, such as fine art or collectibles that gain value as time passes. So an asset can be worth more than it was originally acquired for even if it was purchased at fair market value originally.

APRThe annual percentage rate (APR) is what you pay per year to maintain a loan or line of credit; it includes the basic interest rate as well as broker fees and other charges. Credit cards often have multiple interest rates that can be applied to your debt.

Assets: Any item that has a significant cash value to the extent it could be sold for a notable payout or used to settle a debt. This often includes property, vehicles, fine art, collectibles, investments, and jewelry. It does not include things like clothing or everyday household items.

ATM: Automated Teller Machine. This is a terminal found at financial institutions and other places where you can withdraw physical cash using a debit or credit card. When you make a withdrawal with a debit card, you take money directly from your bank account; a withdrawal with a credit card is called a cash advance. In both cases, you will usually incur fees for using the machine.


Balance transfer: This happens when you move debt from one or more high-interest credit cards by transferring it onto another credit card with a lower interest rate. There is typically a balance transfer fee attached, so make sure you know the fees before you make a transfer. Also, make sure to transfer balances to a card with the lowest interest possible or get a new card with 0% APR on balance transfers.

Balance transfer APR: This is the interest rate that gets applied to debts after you transfer balances from one credit card to another. The lower the rate, the more beneficial your balance transfer will be.

Bankruptcy: A legal declaration that you are not able to repay your debts filed in court. A judge determines if your assets can be liquidated to repay at least a portion of what you owe or if you can be put on a limited payment plan administered by a trustee. In either case, (almost) all of your outstanding balances are discharged once your filing is complete. Causes and 7-10 year penalty on your credit report, depending on the type of filing you make.

Bear market: This is an economic market condition where confidence is low and returns on investments are weak. Essentially, it’s not a good time to invest, but this fear of investment often causes even weaker conditions that cause the bear market to continue.

Bonds: This is a type of investment where you effectively loan money to a government or other entity at a fixed interest rate for a certain period of time. After that period, the money loan plus the interest earned is repaid. This is a basic type of asset. Bonds can be issued by private companies, states or the federal government, or foreign governments.

Boom economy: This is a period of time where key economic indicators are positive, which usually inspires consumer and investor confidence. The stock market is stable or growing, consumers are buying, companies are growing, and investors are active.

Borrower: A person who has been approved to receive a loan or line of credit that they are obligated to repay; also known as a debtor.

Bust economy: This is a period of time where the economy is considered weak. Investors are not investing, businesses are experiencing slow sales and may face closures, consumers are not spending and often turning to debt to get by. An extended bust is likely to fall into a recession.

Budget: This is a formalized data-driven overview of income and expenses over a set period of time. A personal monthly budget is usually necessary for a consumer to maintain a stable financial outlook. A national budget is what Congress is supposed to set every year that determines how the federal government spends its money.

Bull market: An economic market condition where stock prices are rising, investment opportunities are strong and key economic indicators are good. This is usually a good time to invest.


Cash advance: This allows anyone with a credit card to take out cash from an ATM using their card. Cash advances always carry a higher interest rate than other charges on a credit card, and the interest begins to compound daily starting on the day the cash is withdrawn.

Cash advance APR: The specialized interest rate applied to cash advances taken out on a credit card. Cash advance APR is usually much higher than the rate applied to regular purchases, making cash advances on credit cards an expensive option.

Chapter 7 bankruptcy: There are two different types of bankruptcy. Declaring Chapter 7 bankruptcy, often called “straight bankruptcy,” or “liquidation” is usually the quickest and most simple type of filing to make. Most of your assets (some may be excluded) are liquidated (sold off) to repay at least a portion of what you owe; the remaining balances are discharged. Filing remains as a negative remark on your credit report for 10 years.

Chapter 13 bankruptcy: A different type of personal bankruptcy that allows you to keep your property and assets. Instead, you make court-assigned payments over time, usually 3 to 5 years, on a program administered by a trustee. At the end of your payment schedule, the remaining balances on your debts are discharged. Chapter 13 bankruptcy causes a 7-year credit penalty.

Charge-off status: This term sounds more positive than it actually is. If your credit card is charged-off, you will not be able to make purchases with it. In fact, it’s already been closed for several months for default due to lack of payment. When a credit card company declares you are charged-off, it’s because you haven’t made a payment in a while and your debt is considered a loss to the credit card company.

Checking account: This is a standard bank account that you use to deposit money and make withdrawals. The money deposited doesn’t earn any interest as you have with a savings account, but you can add and withdraw without penalties using checks or a debit card.

Compound interest: This is where interest earned over a certain period is rolled in with the principal before the next interest payout is calculated; it’s commonly applied to savings and investments. For instance, if you deposit money and it earns a certain amount of interest, that amount is added to the deposit amount for the next interest assessment.

Consumer Financial Protection Bureau: The CFPB is an independent agency established by the U.S. government after the 2008 recession that is responsible for monitoring the financial sector. Their jurisdiction includes banks, credit unions, payday lenders and mortgage services, and the agency keeps a close eye on practices that are dangerous for consumers.

Cost of living: This is the total amount of money it takes for you to survive and live comfortably over a set period of time. The monthly cost of living is what it takes for your household to run effectively. If your income does not exceed the cost of living, you usually go into debt or face other financial challenges. The average cost of living is something you always want to check before you move to a different location.

CPA: The acronym for Certified Public Accountant. Always make sure you’re using the services of a CPA if you need some type of accounting service.

Credit: This can mean several different things in personal finance. Credit is commonly used to refer to money a consumer can access in order to purchase goods and services; it is often paid back over a set period of time. Credit can also refer to an amount of money offered as a discount, such as a tax credit or an account credit where you have a discount on a bill.

Credit card: This is a financial tool that consumers can get based on their credit rating. A financial institution agrees to extend a certain amount of money to you based on your credit score (or based on a deposit you’ve made to the institution).

Credit Card Accountability, Responsibility, and Disclosure Act: The Credit CARD Act of 2009 included several protections for consumers: credit card issuers must notify you of a rate increase at least 45 days in advance; double-cycle billing (where interest is charged on both the current balance and the previous month’s balance) is banned; and various consumer fees, including over-the-limit fees and other penalty charges, are banned.

Credit Card Annual Percentage Rate (APR): This is the interest rate that gets charged to debts incurred on credit cards. Different cards have different rates – some lower, some higher. Rates also depend on your credit score. The higher the APR, the faster interest builds and the fast your debt grows.

Credit card statement: All of the monetary transactions you’ve made within the last billing cycle compiled onto one bill. A statement will also typically include important disclosures about your account.

Credit counseling: Credit counselors are trained professionals who look at your financial situation and advise you on a plan to reduce your debt. They can also provide a form of assisted debt consolidation known as a debt management program.

Credit history: Simply put, a record of all the money you have borrowed and repaid; a portion of your credit history is compiled into a profile known as your credit report.

Credit report: A snapshot of your credit history that creditors and lenders use to assess your ability to repay loans and lines of credit. It includes positive and neutral information from your entire time as a credit user, plus negative information that remains only for a certain period of time. It also includes personal information, such as employment history and court-ordered financial decisions.

Creditors: Anyone to whom you (the debtor) owe money; also known as a lender. For example, if you have credit card debt, your creditors might be Bank of America, Citibank, and so on.


Debit card: This is a financial tool tied to your bank account(s) that allows you to withdraw money from an ATM or make purchases using the money you’ve deposited into the account.

Debt: Money you borrow that gets repaid over time, usually with interest and fees added. Closed-end debt is where you borrow a set amount once and then pay it back over time. Open-ended debt means you have a certain limit based on your credit that you can borrow and pay back cyclically.

Debtphobia: A generalized fear of taking on new debt, often brought on by an economic downturn. This term was first used by the New York Times during the global coronavirus pandemic.

Debt collector: An agent who attempts to collect the outstanding balance on a debt that has been written off (moved to charge-off status) by the original creditor. Collectors can be in-house working for the creditor’s collections department, or a third party. Any collector is legally required to adhere to the regulations set forth in the FDPCA.

Debt consolidation: The process of combining multiple debts into a single monthly payment at the lowest interest rate possible. The goals of credit card debt consolidation are to lower your monthly payments plus reduce your interest rates so you can get out of debt faster even though you’re paying less each month.

Debt consolidation loan: A personal loan that rolls multiple debts into a single, lower-interest monthly payment. You take out the loan and use the money to pay off your unsecured debts, leaving only the loan to pay off. These loans can be secured or unsecured; a secured consolidation loan may also be known as a home equity loan.

Debt counseling: This is another name for credit counseling. Services offered include: giving guidance on how to manage money and eliminate debt, how to create and follow a budget, and free educational materials and workshops.

Debt management program: A form of assisted debt consolidation administered through a credit counseling agency. Your debts are consolidated into one monthly payment that you make directly to the agency, who negotiates with your creditors for lower interest rates and distributes payments each month on your behalf.

Debt negotiation: Another name for debt settlement. You or an agent representing you offer a creditor a reduced amount of money (either paid in a lump sum or on a limited payment plan). In exchange, the creditor agrees to discharge the remaining balance on your debt.

Debtor: A person who borrows money. Sometimes used interchangeably with “borrower.”

Debt-to-income ratio: A useful ratio that compares your monthly debt payments versus your total monthly income. Mortgage lenders use DTI to qualify borrowers for new loans. You must have a DTI of 41% or less in order to qualify for a new mortgage. It can also be used to assess your own financial health.

Debt settlement: The debt relief option where you settle your outstanding unsecured debts for less than the full amount owed. Your creditor agrees to accept a sum of money (either in one lump sum or paid over a period of time) to discharge the remaining balances on your debt. Also known as debt negotiation.

Deduction: Money is taken out. Money deducted from your paycheck means you receive a lower payout and instead set aside that income for certain purposes, such as taxes or a retirement account. A tax deduction is money that is taken out of the total amount you owe.

Default: If you do not pay your credit card bills for 90 to 120 days or more, your loan or credit card account will go into default status. This means that you have not made your required payments, and the credit line will go into collections.

Deferment: In deferment, a lender agrees to temporarily suspend your monthly debt payments if you’re facing a brief period of financial hardship. You make no payments during deferment, but the lender does not report missed payments to the credit bureaus, so it does not damage your credit. Interest charges continue to accrue. However, if you defer subsidized federal student loans, the government pays those charges for you.

Depreciation: Decreasing the value of an asset over a given time. Some assets lose value – such as most cars. This means you can’t sell the asset for as much as you purchased it for originally. If an asset depreciates, it means it’s not worth as much as it was previously.

Discretionary expense: A type of expense that isn’t necessary for you to live and doesn’t have a set monthly cost. These are the nice-to-have expenses in your budget, such as entertainment and dining out.

Dividends: The money a company pays out to its shareholders when the company profits. When the company does not profit, dividends may be paid out of a company’s reserves.


Expenditure: An amount of money spent for a certain purpose or the act of spending that money. These are the expenses and costs in your budget.

Expense: This is a cost in your budget. It’s money that must be deducted from your income. If your expenses are higher than your income, your budget is out of balance and you’re in a period of financial distress.


Fair Credit Reporting Act (FCRA): A law enacted in 1970 to promote “accuracy, fairness, and the privacy of personal information” by credit bureaus. There are three major credit bureaus in the U.S.: Experian, Equifax, and TransUnion. Regulates what can be reported and how long negative information can remain in a consumer’s credit report.

Fair Debt Collection Practices Act (FDCPA): Passed by Congress in March 1978, this act was designed to prohibit “abusive, deceptive, and unfair debt collection practices.” This law protects consumers from excessive phone calls, abusive language, threats of violence, and contact at inconvenient times.

Fair market value: The amount of money that could be obtained for the sale of an item given current market prices. No matter how much you think something is worth, the fair market value is what everyone else thinks that item is worth – essentially, it’s what other consumers would be willing to pay for your item.

FICO credit score: The original credit score calculation used to identify consumers as high or low risk on repaying loans and new lines of credit. The calculation is also used as a base by the credit bureaus and other agencies to develop their own proprietary score calculations. FICO scores can range from 300 to 850. A good FICO score is usually considered 650 and above.

File jointly: This is a filing option for taxes available to married couples. It means that you file your taxes as a single entity rather than as two individuals.

File separately: This is the filing option married couples choose if they don’t want to file jointly. Married filing separately means you each file an individual tax return.

Financial advisor (or adviser): A professional who assists consumers with understanding their personal finances and making key decisions about their financial futures. An adviser can help you improve your situation or plan for retirement. Always make sure you work with a qualified, licensed, and/or certified professional.

Financial power of attorney: This is the power of attorney you designate to put a certain individual in charge of making key financial decisions for you in case you are incapacitated or unable to make and communicate these decisions for yourself. They handle paying your bills and managing your accounts in your stead.

Fixed expense: A necessary expense in your budget with a set monthly cost. These are must-pays in your budget that usually have the same cost, such as mortgage or rent payments, auto loan payments, and insurance. These are usually paid first and they’re easy to budget for since you usually know exactly how much money it will cost you.

Flexible expense: This is a necessary expense in your budget that does not have a set monthly cost. Essentially, it’s something you have to have, but you can’t plan exactly how much it will cost because the expense varies from month to month. This includes things like groceries, utilities, and gas.

Forbearance: In a forbearance, a lender agrees to temporarily reduce or suspend your monthly debt payments. The lender will typically set a time limit and you will usually be expected to make catch-up payments once the forbearance ends to bring your account current. Interest charges usually continue to accrue during forbearance.

Free cash flow: The amount of money left over in your budget once all of your bills and other expenses have been taken out of your income. If your monthly household income is $5,000 and your expenses are $4,000, then you have free cash flow of $1,000.


Garnishment: An amount of money taken out of your income in order to satisfy an owed debt. This usually applies to wages or taxes, although garnishment can also happen with government benefits or assistance. A court usually formally determines that a debt is owed and sets garnishments to be taken out of your income based on the total amount owed. Some garnishment such as garnishment for student loans or taxes can be withdrawn without court involvement.


Home equity loan: This is a type of loan where you use your house as collateral to secure the loan. It is a pledge that you will pay back the loan, or else you will lose your house if you don’t pay off the debt. May be used to consolidate debt if you cannot qualify for an unsecured debt consolidation loan, although this can be a risky option for repaying debt.


Income: This is money you earn or bring in each month. It includes paychecks, benefits, dividends, government assistance, and court-ordered payouts such as child support or alimony. Your monthly income is the amount of money you have available to spend in your budget.

Inflation: This is the dollar increase in the price of goods and services that happens over time. It is directly associated with the value of a dollar. When the dollar is weak, inflation occurs more quickly because it costs more to produce goods and services consumers use.

Installments: This is when a sum of money that needs to be paid is divided into equal amounts over a set period of time. If you pay for something in installments, you pay a percentage of the full price spread out over a certain number of payments. With things like retirement benefits, you usually decide if you want to receive a lump sum all at once or in installments.

Interest rate (see also APR)The rate at which financing charges applied to an outstanding debt balance. The “periodic” interest rate is the rate applied to your debt each billing cycle. The annual percentage rate is the rate applied to your debt over the course of year.

Interest rate: A certain percentage of a debt owed that gets added over a set period of time. The interest rate on a debt means that for each pay cycle that passes, the lender multiplies the remaining balance owed by the rate and adds that to your balance owed. With an investment, the interest rate means your deposit or contributions are multiplied by the rate, and your eventual payout increases by that amount.

Investment: This is any good that is purchased with the intention of earning a profit or getting an eventual payout. This can be a financial entity, such as a stock or bond, or a physical entity such as a piece of property or particular item that you anticipate will gain value over time.

IRA: Individual Retirement Account. This is an account that you open personally (outside of your employer) for the purpose of preparing for retirement. With a traditional IRA, you contribute pre-tax income with certain rules and regulations for withdrawal. A Roth IRA is usually more flexible, but the contributions occur after taxes.


Joint account: An account you hold with someone else, usually a spouse. With a joint account you are both liable for whatever occurs. So, if you have a joint credit card that is not paid back, both parties can be pursued by collectors and both people will see their credit scores suffer.


Levy: A fine or fee imposed on your financial accounts due to non-payment of taxes. Essentially, any money put into an account with a levy will be removed for the purpose of settling the debt owed.

Liabilities: This is basically a fancy name for debts owed. It’s essentially the money that you or your estate owes to lenders and creditors, including any remaining balances owed on loans related to asset purchases. Subtracting liabilities from your assets determines your net worth.

Lien: A legal designation that retains ownership of an asset until a debt is discharged. Basically, if a lien is placed against an asset, you cannot legally sell or get rid of that asset until your debt is paid off. The most common lien issue comes with tax liens placed against your home.

Loan: A set amount of money borrowed from an individual or company that must be repaid over a certain period of time, usually with interest and fees added.

Lump-sum: This is a one-time withdrawal or payout of money. Lump-sum debt repayment means you pay everything back at once, rather than in installment payments over a given period of time. Lump-sum withdrawal means you take all of the money available out of an account, such as your 401(k) or a reverse mortgage.


Means Test: This test is required to determine whether or not a person is eligible for personal bankruptcy, and which type of filing they qualify to make. It is calculated by comparing your yearly income to the median income line in your state. Your financial history will also be reviewed to identify any potential issues of bankruptcy abuse – where you run up debt just prior to filing to “game” the system.

Medical power of attorney: The power of attorney designated to make medical decisions in your place if you are incapacitated or otherwise unable to make or voice those choices on your own. Your designated medical POA decides if medical procedures and surgeries are done if you cannot.

Money market account (MMA): A specialized type of savings account that usually requires a higher deposit and balance, but also offers a higher interest rate and yield; there may be other restrictions on withdrawals, as well. Also known as a money market deposit account (MMDA) or money market savings account.

Mortgage: A loan taken out on a piece of property. It allows consumers to purchase property and pay for it over a period of time – usually anywhere from 15 to 30 years. There are a variety of different mortgages available depending on your financial situation and credit.

Mutual fund: This is a trade-holding investment program funded by shareholders that get professionally managed by a third-party service provider. When you invest in a 401(k) or IRA, the money you contribute is usually divided between different mutual funds in order to generate returns on your investment. The money given to a mutual fund may be invested in stocks, bonds, MMAs and other securities. If things go wrong or the economy goes bust, the money put into a mutual fund may be lost.

Money management: The daily oversight of finances. For individuals, this is the day-to-day process of making deposits and payments in order to support yourself and your family. Your ability to manage your money effectively is a key factor in determining your financial success. If you can’t manage your account to spend less than you earn, your budget will be out of balance and you will experience financial distress.


Net worth: A measure of your overall financial wealth. It is determined by subtracting your total liabilities (debts) from your total assets. A positive net worth means that you would have assets left over even after all of your debts were paid off in-full. A negative net worth means the value of your assets are not enough to cover your total debt owed.


One-off: An expense that can be planned for your budget because it is not a regularly occurring expense. Things like repairs or holiday expenses are usually considered “one-offs” because they fall outside the boundaries of your regular monthly budget. One-offs usually have to be paid for with free cash flow, savings or by taking on debt.

Online banking: The ability to manage your financial accounts digitally, either on a computer, smart phone or other mobile device. Also known as mobile banking. In some cases, banks offer accounts designed for online or mobile banking, so you get incentives and/or discounts for doing things like paying bills online.

Overdraft: When you take money out of an account or make a purchase that you don’t have money in the account to cover. An overdraft effectively means you’re spending money you don’t actually have. This results in cancelled services, bounced checks, penalties and overdraft fees. Some banks offer overdraft protection, which means your purchases are covered up to a certain amount, but additional fees may be assessed.


Payday loan: A short-term installment loan with high financing charges and extremely high APR. The money borrowed is usually due on your next payday. If the balance is not paid in-full, it is rolled over to your next pay cycle and interest is applied. Since it features fast approval with no credit check, this is often an option used by consumers who are short on cash, but it has a high potential of causing problems if you use them to overspending problems in your budget. The money is usually deposited directly into your account and payments are withdrawn automatically.

Penalty APR: This is a specialized type of interest that gets applied to a credit card debt if you are more than 30-60 days late with your credit card payment. Rates can be double your regular rate (or more) depending on the creditor and your account terms. Rate applies every month to your full balance until you are able to make six consecutive payments on time in a row.

Personal finance: Everything that relates to your individual financial outlook, including budgeting, savings, debts, investments, and basic money management. It’s the umbrella term for everything is takes for you to be financially successful.

Periodic interest rate: Interest charged over one pay period, as opposed to the annual rate that is charged over a full year. Periodic interest is the rate that gets multiplied by your account balance at the end of a pay period or billing cycle. That period is determined by you account, but is usually weekly, bi-weekly, monthly or quarterly.

PFM: Personal Financial Management. This is the name given to online platforms and mobile device apps that allow you to manage your money day-to-day. These tools allow you to manage the money in your accounts with more convenience, such as including all of your accounts in one place or making your accounts more accessible.

Portfolio: Another name of the sum total of your assets and investments. It’s basically an overview of your wealth. A good financial portfolio means you are financially stable with a diversified range of investment accounts and assets that can provide support if you suffer a period of financial distress.

Power of attorney: The legal designation that makes an assigned individual responsible for making key decisions on your behalf if you are unable to make or voice those decisions yourself. A medical POA makes key medical decisions, while a financial POA controls your money.


Recession: A period of extended economic downturn exemplified with a bust economy, weak consumer confidence, and stagnant business outlooks. In a technical sense a recession happens when a country’s gross domestic product (GDP) falls for two consecutive months.

Revolving debt: A type of debt with no fixed payment. This is most commonly seen on credit cards. With closed revolving credit lines, the full amount borrowed each month is due at the end of the payment cycle. With open revolving credit lines, payments are calculated as a percentage of the full amount owed.

Risk: This is the potential for a financial investment or action to result in a negative outcome, such as a loss of money or a loss of property. Investments usually come with a certain level of risk, based on how likely or unlikely it is that the money contributed will be paid back with returns or lost completely. Other financial decisions can add risk, such as the added risk of foreclosure that occurs if you take out a second or third mortgage.

Roth IRA: This is a specialized type of Individual Retirement Account where the taxes are taken out now to avoid taxes later when the money is withdrawn. With a traditional IRA or 401(k) the money you contribute is taken out of your pre-tax income, but when you make withdrawals, you have to pay taxes on the “income” you receive. With a Roth IRA, you contribute money you earn after taxes, but the withdrawals are tax-free.


Savings: Money you have put away for a rainy day. Short-term savings is money you have set aside that grows slowly with low interest added in things like a savings account or MMA. Long-term savings is money you have saved for a future purpose, such as retirement or college savings accounts. This is basically the money you have to depend on in place of income or money borrowed.

Savings account: A bank account that earns a small rate of interest on any deposits kept in the account. This account is usually used for short-term savings so you have money separate from your basic checking or bank account that’s still easily accessible. These accounts should not be your only form of “investment” because they have such a low rate of return.

Secured debt: A debt that uses a physical property, such as a house or a car, as collateral for a loan. This means that you pledge your house or car toward the repayment of your loan, and if you fail to make payments, your creditors may seize your property.

Securities: Another name of stocks and bonds collectively. It’s a financial tool that has cash value and counts as an asset. Securities are issued by companies or governments to individuals who purchase them with the intent to make a profit as a shareholder or bondholder.

Stock market: A stock exchange where shares of companies are bought and sold by individuals and investment firms.

Stock: The money a business raises by selling its shares. Essentially, ownership of a company is divided into bits (shares) that are sold as a commodity or asset. These shares are purchased and when the company’s “stock” goes up, the shareholders receive a portion of the profits, paid out as dividends.


Treasury note: A security issued by the federal government (U.S Treasury) that has a cash value with a fixed interest rate and set period to reach maturity. In a really basic sense, it’s a personal loan you give to the federal government, who then has to pay you back after a certain amount of time with interest added. Also called a T-note.

Tax return: This is the official filing you have to make to the government that declares how much you’ve earned over the past year and how much you must pay in taxes, determined by calculating your income minus deductions and credits. Federal income tax returns must be filed on April 15 every year for the previous year, unless an extension is filed.

Tax refund: A sum of money that the government gives you back for an overpayment of taxes. In most cases, whether you’re a W-2 employee or employed individually, you give a certain amount of money to the government at regular intervals (i.e. every paycheck for W-2 employees); if it’s determined when you file your tax return that you overpaid, you get money back. A large tax refund isn’t doing you any favors; you should decrease your withdrawals if you’re a W-2 employee and get a huge refund every year.

Trust: An account where you can put money in for another individual, usually with certain rules that govern the withdrawal. Money put into a trust is no longer yours by law; as a result, your lenders can’t go after the money in a trust in order to settle your debts. Trusts are often set up for children as part of the inheritance of an estate.


Unsecured debt: A debt that doesn’t have any physical property attached to it. Most credit cards are unsecured, as well as student loans and medical debt. It means that if you fail to make a payment on any one of these debts, the creditor cannot take any of your property without suing you (successfully) first.

Utility: This is a basic public service you pay for the privilege of using. It includes things like water, electricity, gas, sewage and garbage services, telephone, and the Internet. You pay for these services every month to avoid stoppages in your service. These are typically flexible expenses in your budget because the amount you pay each month often varies.


VantageScore: A credit-rating method, similar to the FICO score, developed by the three major credit bureaus — TransUnion, Equifax, and Experian. It was created in 2006 by the bureaus working together in an attempt to compete directly with the FICO scoring system.


Wealth: This is the sum total of your personal finances. The cash you have plus savings and investments and assets, minus your debts and other obligations. Wealth is formally measured using net worth.

Wealth manager: This is another name for an investment manager. It’s a qualified professional who helps you decide how to invest your money and whether or not you’re ready to make key purchases. If you are uncertain about investing, it’s better to hire a professional like this than to avoid investing at all.

Will: A formal document that defines how you wish for your estate to be divided in the event of your death. Your will must be signed and dated and witnessed by at least two other people who also sign as witnesses; public notary can also help avoid problems with inheritance and division of assets. You can designate certain assets and items to go to certain individuals or entities such as business or charities.


Yield: This is the money you earn from the accrued interest on an investment. The expected yield on a particular investment is another name for the expected rate of return, and it can help you determine if that investment is worth your money.

Article last modified on April 24, 2023. Published by, LLC