Glossary

Clear, approachable definitions for money words. Terms in lessons link here automatically.

73 terms

1099
A tax form reporting income paid to independent contractors and freelancers — usually with no tax withheld.
Example: Jordan earns $2,000 from freelance design and receives a 1099-NEC at year-end.
1099-NEC
Tax form reporting nonemployee income like freelance or gig work.
Example: Payment app sends 1099 if you earned enough.
Allowance
Money parents or guardians give regularly, often tied to chores or agreed rules.
Example: You get $15 every Friday as allowance.
APY
Annual Percentage Yield — the real rate you earn on savings in a year, including compound interest.
Example: A savings account with 4% APY grows a little faster than one quoted at 4% simple interest.
Balance sheet
A snapshot of what a company owns (assets), owes (liabilities), and shareholders' equity on a specific date.
Example: Cash and buildings are assets; loans and bills owed are liabilities.
Barter
Trading goods or services directly without using money.
Example: Swapping tutoring for a bike repair.
Behavioral finance
The study of how psychology and biases affect financial decisions.
Example: Selling in panic after a headline even though your long-term plan didn't change.
Bond
A loan you make to a government or company. They pay interest and return your money when the bond matures.
Example: You buy a $100 bond and receive $4 interest each year until it matures.
Budget
A plan for your money — how much to save, spend, and give before you use it.
Example: You budget $8 for saving and $8 for spending each week.
Buy Now Pay Later
Splitting a purchase into installments, often with late fees if you miss payments.
Example: Four payments of $25 on a $100 hoodie.
Buy now, pay later
A way to split a purchase into smaller payments over time. Missing a payment can mean fees.
Example: You pay $10 now and $10 later for a $20 hoodie.
CD
Certificate of Deposit — savings you leave in the bank for a set time to earn higher interest.
Example: You put $200 in a 1-year CD and earn extra interest.
CFP
Certified Financial Planner — a credential for advisors who help people plan saving, investing, and life goals.
Example: A CFP helps a family plan for college and retirement.
Charitable giving
Donating money, goods, or time to help people, causes, or organizations you care about.
Example: Jordan donates $10 each month to a local food bank.
Checking account
A bank account for everyday spending, often with a debit card.
Example: You use checking to pay for lunch with your debit card.
Compound interest
Earning interest on your interest over time, so savings can grow faster the longer you wait.
Example: Year 1 you earn $5; year 2 you earn interest on the new total.
CPA
Certified Public Accountant — a licensed accountant who passed extra exams and meets experience requirements.
Example: A CPA helps a business file taxes and audit its books.
Credit
Borrowing money you must pay back, often with extra cost called interest.
Example: Using a payment plan to buy something before you've saved the full amount.
Credit score
A number (300–850) that shows lenders how reliably you repay borrowed money. Higher scores often mean better loan terms.
Example: Paying your phone bill on time every month helps build a good credit score over time.
Credit utilization
The percentage of your credit card limit you're currently using. Lower utilization often helps your credit score.
Example: If your limit is $500 and your balance is $100, your utilization is 20%.
Cryptocurrency
Digital money that can change in value quickly. Often risky and hyped.
Example: Bitcoin is a well-known cryptocurrency.
Debit card
A card that spends money directly from your bank account.
Example: You tap your debit card and $12 comes out of checking.
Deductible
Amount you pay out of pocket before insurance covers a claim.
Example: $500 deductible on a $3,000 car repair.
Diversification
Spreading money across many investments so one bad result doesn't hurt everything.
Example: An index fund owns pieces of hundreds of companies at once.
Dividend
Cash some companies pay to shareholders from their profits.
Example: You own 10 shares and receive $2 per share as a dividend.
Dollar-cost averaging
Investing a fixed amount on a regular schedule regardless of market prices.
Example: Investing $25 every month into an index fund.
Emergency fund
Money set aside for unexpected expenses — not for wants or planned goals.
Example: You keep $75 in a separate jar for a cracked phone screen or lost bus pass.
Entrepreneurship
Starting and running your own business to earn money.
Example: You run a dog-walking service in your neighborhood.
ETF
Exchange-traded fund — a basket of investments that trades on a stock exchange like a single stock.
Example: An S&P 500 ETF owns pieces of 500 large U.S. companies in one purchase.
FDIC
Federal Deposit Insurance Corporation — protects bank deposits up to $250,000 per account type if a bank fails.
Example: Your $500 in an FDIC-insured savings account is protected.
Fintech
Financial technology — apps and systems that handle money digitally, like mobile banking and payment apps.
Example: A round-up savings app that moves spare change into savings is fintech.
FOMO
Fear Of Missing Out — pressure to buy because others have something or a sale "ends soon."
Example: An ad says "only 2 left" so you rush to buy.
Futures contract
An agreement to buy or sell an asset at a set price on a future date; both sides are typically obligated unless the position is closed early.
Example: A bakery might use wheat futures to lock in flour costs before harvest season.
GDP
Gross Domestic Product — the total value of goods and services a country produces; a key measure of economic size and growth.
Example: If GDP shrinks for two quarters, many call it a recession signal.
Gross pay
Your total earnings before taxes and other deductions are taken out.
Example: Your paycheck says $600 gross for the month.
Growth stock
Stock of a company expected to grow earnings faster than average; often reinvests profits.
Example: Fast-expanding tech firms are often labeled growth stocks.
Hedge fund
A private investment fund using flexible strategies for wealthy or institutional investors, often with high fees and lock-up periods.
Example: A pension fund might allocate a small slice to hedge funds seeking returns different from the stock market.
Identity theft
When someone steals your personal information and pretends to be you to get money or open accounts.
Example: A scammer uses your name and Social Security number to open a credit card in your name.
Income statement
A financial report showing revenue, expenses, and profit or loss over a period.
Example: A company reports $10M revenue and $1M profit for the year on its income statement.
Index fund
A basket of many stocks that tracks a market list, like the S&P 500.
Example: One fund gives you a tiny piece of 500 big companies.
Inflation
When prices rise over time, so the same amount of money buys a little less.
Example: A candy bar that cost 50 cents years ago might cost $2 today.
Insurance
Protection you pay for (a premium) that helps cover big unexpected costs.
Example: Car insurance helps pay for repairs after an accident.
Insurance premium
Regular payment to keep an insurance policy active.
Example: $120/month for auto insurance.
Interest
Extra money — either what a bank pays you for saving, or what you pay for borrowing.
Example: You earn 5% interest on $100 and have $105 after a year.
Lifestyle inflation
When spending rises as income rises, so you never feel richer.
Example: A raise goes to new subscriptions instead of savings.
Margin call
When a broker demands more cash or forces sales because your leveraged account fell below required levels.
Example: Your stocks dropped and the broker calls saying deposit $500 by tomorrow or they'll sell your shares.
Marginal tax rate
The tax rate on your next dollar of income, not all your income.
Example: Only dollars above a bracket threshold are taxed at the higher rate.
Mutual fund
A pooled investment that buys a portfolio of stocks, bonds, or both; priced once daily at NAV.
Example: Many retirement accounts invest in mutual funds.
Needs vs wants
Needs are must-haves for life and safety; wants are extras you could live without.
Example: Food is a need; the latest video game is usually a want.
Negotiation
Talking respectfully to reach a fair agreement on price, pay, hours, or terms.
Example: You ask a neighbor, "Would you consider $13 an hour?" and they agree on babysitting pay.
Net pay
Take-home pay after taxes and deductions — what actually lands in your account.
Example: Gross is $600 but net deposit is $540.
Opportunity cost
What you give up when you choose one option instead of another.
Example: If you spend $15 on a game, you can't use that $15 for your concert goal.
Overdraft
When you spend more than you have in checking. The bank may cover it but charge a fee.
Example: You have $8 but swipe for $12 — overdraft can cost $30+ in fees.
P/E ratio
Price-to-earnings ratio — stock price divided by earnings per share; one valuation clue.
Example: A P/E of 20 means investors pay $20 for each $1 of yearly earnings.
Phishing
Fake messages or links designed to steal passwords or money.
Example: A text says "click here to unlock your account" but it's a scam.
Portfolio
Your collection of investments — stocks, funds, property, or other assets you own.
Example: An investor's portfolio might include two rental properties and an index fund.
Predatory lending
Unfair loans with high fees, confusing terms, or traps that keep borrowers in debt.
Example: A payday loan charging $45 to borrow $300 for two weeks is often predatory.
Premium
The regular amount you pay for insurance coverage.
Example: You pay a car insurance premium every month.
Private equity
Investment in private companies or take-private deals, often using debt to improve and later sell the business.
Example: A PE firm buys a regional restaurant chain, updates operations, and sells it five years later.
Profit
Money left after paying all costs of a business or job.
Example: You earn $80 mowing lawns and spend $20 on gas — profit is $60.
Risk
The chance you could lose money on an investment or decision.
Example: Stock prices can go down as well as up.
Sales tax
Extra money added to many purchases, set by your city or state.
Example: A $10 shirt might cost $10.80 after tax.
Savings account
A bank account meant for money you want to keep safe and grow a little with interest.
Example: You put birthday money in savings for a bike goal.
Security deposit
Money a landlord holds when you move in, often one month's rent, returned if you leave the place in good shape.
Example: You pay a $900 deposit plus first month's rent before getting your apartment keys.
Shareholder
Someone who owns shares of a company's stock — a part-owner of that business.
Example: If you own 10 shares, you are a shareholder of that company.
Stock
A small piece of ownership in a company. Also called a share.
Example: Buying 10 shares means you own a tiny part of that company.
Student loan
Money borrowed to pay for college that you repay later, usually with interest.
Example: You borrow $20,000 for school and repay $250 per month after graduation.
Subscription
A recurring charge until you cancel — monthly or yearly.
Example: A $5/month music app costs $60 per year.
Taxes
Money paid to the government to fund services like schools and roads.
Example: Part of your paycheck goes to income tax.
Unit price
Cost per single item or per ounce — helps compare different package sizes.
Example: A big bag might cost less per snack than small bags.
Value stock
Stock that may trade below what investors estimate it's worth based on earnings or assets.
Example: Mature companies with steady dividends are often called value stocks.
Venture capital
Funding for early-stage startups in exchange for ownership, expecting many failures and a few big wins.
Example: A VC fund invests in a two-person app startup before it has profit.

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