Financial Terms for the Financially Literate

There are a lot of financial terms that get thrown around in the news and in personal conversations. But what do they actually mean? Let’s explore some of the most common financial terms and break them down so that everyone can understand them!

Why is it important to be financially literate?

Financial literacy and a proper understanding of financial terms is critical in today’s society. It allows people to make informed decisions about their money, understand how to save and invest for their future, and avoid debt. Financial literacy is also important for businesses and the economy as a whole. Continue reading to explore the list of Financial Terms.

100+ Financial Terms to make you Financially Literate

Amortization

Amortization is the gradual reduction of a debt over a period of time. It occurs when a loan is repaid in installments, rather than all at once. Each installment consists of both principal (the amount of money being borrowed) and interest (the fee charged for borrowing). As each installment is paid off, the principal portion reduces while the interest portion remains the same. This process continues until the loan is fully repaid.

Annual Fee

An annual fee is a charge assessed by a company each year to maintain the account. It is usually a fixed amount and may be charged regardless of whether or not the account is used. Annual fees are common among credit card companies and other financial institutions.

Annual Percentage Rate (APR)

The Financial Terms Annual Percentage Rate (APR) refers to the yearly rate of interest applied to a loan. It is expressed as a percentage of the loan amount and includes both the principal and the interest. APR is used to compare different loans, so that consumers can make informed decisions about which one is best for them.

Annual Percentage Yield (APY)

The Annual Percentage Yield (APY) is a measure of the rate of return on an investment. It takes into account the principal, as well as any interest that has been earned, but has not yet been paid out. This gives a more accurate picture of the return on the investment than the simple APR. APY is usually calculated on a yearly basis, and is expressed as a percentage.

Appreciation

In finance, appreciation is an increase in the value of an asset. This may be due to a rise in the market price of the asset, or to a change in the underlying fundamentals (such as earnings or dividends) that support its value. Appreciation can be positive or negative, depending on whether the asset becomes more or less valuable. One of the common Financial Terms.

Assets

In finance, an asset is anything that holds value and that can be used to generate future income. This may include cash, investments, property, or any other valuable item. Assets are important for businesses and individuals alike, as they provide a way to generate income and build wealth over time.

Automated Teller Machine (ATM)

An Automated Teller Machine (ATM) is a machine that allows customers to access their bank accounts without having to go into a physical bank branch. ATMs can be used to withdraw cash, deposit checks, and transfer funds between accounts. They are a convenient way for bank customers to take care of their banking needs without having to go to the bank itself.

Back-end load

A back-end load is a type of sales commission that is charged when an investor sells shares in a mutual fund. This type of commission is usually expressed as a percentage of the sale price, and is paid to the person or company who sold the shares. Back-end loads are designed to discourage investors from selling their shares in a mutual fund, and can be a significant hindrance to portfolio turnover.

Bait and switch

In the context of finance, bait and switch is a scheme in which a seller offers a product or service at a very low price in order to attract buyers, but then raises the price once the buyers have been drawn in. This is often done by credit card companies, who may offer a very low interest rate for the first few months of the card’s use, but then raise it to much higher levels thereafter. Bait and switch is considered to be an unethical business practice, and can leave consumers feeling cheated and misled.

Bank

A bank is a financial institution that provides a variety of services to its customers, including savings and checking accounts, loans, and mortgages. Banks are important for individuals and businesses alike, as they provide a way to store money and access credit. Financial institutions like banks also play an important role in the economy, as they help to distribute capital to businesses and consumers.

Bankruptcy

Bankruptcy is a legal proceeding in which a person or business is declared to be unable to pay its debts. This may be due to financial difficulties, or to a court ruling that the company is no longer able to operate. Bankruptcy can have serious consequences for the individual or business involved, including the seizure of assets and the imposition of debtors’ prison.

Bond

A bond is a type of investment security that represents a loan made by an investor to a company or government. Bonds are typically issued by governments or large companies, and are considered to be relatively safe investments. The interest rate on a bond is usually fixed, and the holder of the bond is entitled to receive periodic payments of this interest.

Borrower

A borrower is someone who takes out a loan from a bank or other financial institution. This money can be used for a variety of purposes, such as buying a car or home, or starting a business. Borrowers are responsible for repaying the loan plus interest, and may be subject to penalties if they fail to do so.

Budget

A budget is a plan for how a person or organization will spend its money over a given period of time. A budget typically includes information on both income and expenses, and helps to ensure that money is not spent recklessly. Individuals and businesses use budgets as a way to track their financial progress and stay on track with their financial goals.

Capacity

Capacity refers to the maximum amount of work that can be done by a person or thing. For example, a company’s manufacturing capacity refers to the maximum number of products that can be produced in a given period of time. In general, capacity is determined by the resources available to a person or organization. Another one of the common Financial Terms.

Capital

Capital refers to the money, goods, or assets that a person or organization can use to generate income. It is important to note that capital is not the same as revenue, which is the amount of money that a company actually brings in. Capital represents a company’s potential for growth and expansion, while revenue is a more immediate measure of financial success.

Capital Gain

A capital gain is the increase in value of a capital asset, such as a stock or bond, that results in a financial gain for the holder of the asset. When a capital asset is sold for more than it was purchased for, the difference is considered a capital gain. Capital gains are taxable income, and must be reported to the government.

Capital Loss

A capital loss is the decrease in value of a capital asset, such as a stock or bond, that results in a financial loss for the holder of the asset. When a capital asset is sold for less than it was purchased for, the difference is considered a capital loss. Capital losses can be used to offset capital gains, and may be tax deductible.

Cash Flow

Cash flow is a measure of a company’s liquidity, or its ability to meet its financial obligations. It is calculated by subtracting a company’s expenses from its revenue. This gives you a snapshot of how much cash the company has available to pay its bills. A healthy cash flow is essential for a company’s long-term success, as it allows it to finance growth and expansion. Another one of the common Financial Terms.

Character

In finance, character refers to the creditworthiness of a person or company. A high credit score indicates that a person or company is likely to repay its debts on time, while a low credit score suggests that they are less likely to do so. Financial institutions use a person’s or company’s credit history as one of the factors when determining whether to extend them a loan or offer other financial products.

Check

In finance, a check is a document that authorizes a bank to pay a certain amount of money from the holder’s account to the person or company named on the check. Checks are often used to pay for goods or services, or to transfer money between accounts. Checks can also be used as a form of payment for rent or other monthly expenses. Another one of the common Financial Terms.

Checking Account

An installment plan is a financial arrangement in which a person agrees to make regular payments to a lender over a set period of time. This type of plan is often used to pay off high-interest debt, such as credit card bills or personal loans. Installment plans can help borrowers avoid costly penalties and late fees, and may also be tax deductible.

Compound interest

Compound interest is a type of interest that is calculated on the initial principal amount, as well as on the accumulated interest of previous periods. This means that the total amount of interest paid over the life of a loan will be greater than if simple interest was used. Compound interest is one of the most important concepts in finance, and can have a significant impact on a person’s financial security.

Rule of 72

The rule of 72 is a mathematical rule that can be used to estimate how long it will take for an investment to double in value. To use the rule, divide 72 by the percentage rate of return that you expect to achieve. This will give you the number of years it will take for your investment to double. Another one of the common Financial Terms.

Consumer advocates

Consumer advocates in finance are individuals or organizations that work to protect the interests of consumers when it comes to financial products and services. They often provide free counseling and education on financial topics, and can help consumers negotiate with banks or other lenders. Consumer advocates can be a valuable resource for people who are looking for information on financial products, or who need help resolving a dispute with a financial institution.

Cost/benefit analysis, risk/reward relationship

Cost/benefit analysis is a method of evaluating the costs and benefits of a particular decision or course of action. It helps you to determine whether the benefits of a particular choice outweigh the costs. This information can be helpful in making important financial decisions.

The risk/reward relationship is the relationship between the amount of risk involved in an investment and the potential return that you can expect to receive. A high-risk investment typically offers a higher potential return than a low-risk investment, but it also carries a higher chance of losing money. It is important to understand the risk/reward relationship before investing your money, as it can help you to make more informed choices about where to put your money.

Coverage Limit

In financial terms, a coverage limit is the maximum amount of money that an insurance company will pay for a particular policy. This limit can apply to a single event, such as a car accident, or to a series of events over a period of time. It is important to know your coverage limit before you make any claims, as you may be responsible for any costs that exceed this amount. Another one of the common Financial Terms.

Credit

Credit is a type of loan that is extended to a borrower by a financial institution. The credit line allows the borrower to access a certain amount of money that can be used for any purpose. Credit can be helpful in emergencies, or when you need to make a large purchase that you cannot afford upfront. i.e. installing solar panels to your roof.

Credit score

A credit score is a number that is used to assess a person’s creditworthiness. This score is based on a variety of factors, including the amount of debt that you have, your payment history, and your credit utilization ratio. A high credit score indicates that you are a low-risk borrower, while a low score indicates that you may be at risk for defaulting on your loans. Another one of the common Financial Terms.

Credit Limit

The credit limit is the maximum amount of money that a borrower is allowed to borrow from a financial institution. This limit is typically determined by the borrower’s credit score and other credit history. A credit limit can be increased or decreased at the discretion of the financial institution, depending on the borrower’s current financial situation.

Creditworthiness

In financial terms, creditworthiness is a measure of how likely it is that a borrower will repay a loan. This term is typically used to assess a person’s credit history and credit score. A high credit score and strong credit history are both indicators of good creditworthiness, while a low score or a history of missed payments can suggest that the borrower is not likely to repay their loans. Financial institutions use creditworthiness to determine whether or not to extend credit to a borrower. Another one of the common Financial Terms.

Credit rating/score

A credit rating or credit score is a number that is used to indicate a person’s creditworthiness. This score is based on a variety of factors, including the amount of debt that you have, your payment history, and your credit utilization ratio. A high credit rating or score indicates that you are a low-risk borrower, while a low rating or score suggests that you may be at risk for defaulting on your loans. Financial institutions use credit ratings or scores to determine whether or not to extend credit to a borrower.

Credit report

A credit report is a document that contains a detailed history of a person’s credit activity. This report includes information about all of the borrower’s loans and credit cards, as well as their payment history and credit utilization ratio. Financial institutions use credit reports to assess a borrower’s creditworthiness and to determine whether or not to extend credit to them.

Credit Union

A credit union is a financial institution that is owned and operated by its members. Credit unions offer a variety of financial products and services, including savings accounts, loans, and credit cards. They typically have lower interest rates and fees than traditional banks, and they may also offer scholarships and other financial assistance to their members. Another one of the common Financial Terms.

Debit Card

Debit cards are a type of payment card that allows you to spend money that you already have in your account. When you use a debit card, the funds are transferred immediately from your account to the merchant’s account. This can be helpful when you need to make a purchase but don’t have enough cash on hand.DebtDebt is money that is owed by one person or entity to another person or entity. Debt can be incurred through loans, credit cards, or other means. When debt is not repaid on time, it can result in interest charges and other penalties. Default occurs when a borrower fails to repay their debt according to the terms of their loan agreement. If a borrower defaults on their loan, they may be subject to legal action and may also have difficulty obtaining future credit.

Debt

Debt is money that is owed by one person or entity to another person or entity. Debt can be incurred through loans, credit cards, or other means. When debt is not repaid on time, it can result in interest charges and other penalties. Default occurs when a borrower fails to repay their debt according to the terms of their loan agreement. If a borrower defaults on their loan, they may be subject to legal action and may also have difficulty obtaining future credit. Another one of the common Financial Terms.

Deductible

A deductible is the amount of money that you must pay out-of-pocket before your insurance policy begins to cover your medical expenses. For example, if your deductible is $1,000, you will need to pay for the first $1,000 of any medical bills that you incur. After you have paid the $1,000, the insurance company will start to cover the cost of your medical expenses.

Delayed Gratification

Delayed gratification is the practice of delaying the enjoyment of something to achieve a greater goal. In finance, delayed gratification can refer to the act of saving money to achieve a financial goal such as buying a house or retiring early. It can also refer to the practice of investing in stocks or other types of securities to generate returns over time. Another one of the common Financial Terms.

Depreciation

Depreciation is a term that is used in finance to describe the loss in value of an asset over time. This can happen for several reasons, such as wear and tear or age. When an asset is depreciated, its value is reduced and it becomes worth less money. This can be important for businesses that want to track the value of their assets over time. Another one of the common Financial Terms.

Diversification

Diversification is the practice of investing in a variety of different assets in order to reduce your risk. By investing in a variety of assets, you spread your risk across different investment vehicles. This can help to protect you from losing all of your money if one of your investments performs poorly. Another one of the common Financial Terms.

Dividend

A dividend is a payment that is made to shareholders of a company. Dividends are typically paid out quarterly or annually and are based on the profits of the company. They can be paid in cash or in shares of the company.

Dollar Cost Averaging

Dollar cost averaging (DCA) is a strategy that investors can use to reduce the risk of investing in stocks. With DCA, an investor will purchase shares of a stock over time, rather than all at once. This can help to reduce the risk of buying shares at a high price and then having to sell them later at a loss.

Earned Interest

Earned interest is the income that you receive on your investments. This can be in the form of dividends, interest payments, or capital gains. The more money that you invest, the more money you will earn in interest. Another one of the common Financial Terms.

Employee benefits

Employee benefits in finance are the various perks and benefits that are offered to employees by their employers. This can include things like health insurance, dental insurance, vision insurance, 401(k) plans, and stock options. Employees value these benefits because they can help to reduce their overall costs and make it easier to afford medical care and other important expenses. Another one of the common Financial Terms.

Endorse

An endorsement in finance is a formal declaration that a financial instrument is valid and has been authorized for use. When an endorsement is made, it provides assurance to the holder of the financial instrument that it has been approved by the issuer and is therefore legitimate.

Expense

In financial terms, an expense is a cost that is incurred in the course of doing business. This can be things like the cost of goods sold, rent, payroll, and utilities. Businesses track their expenses in order to determine how much money they are spending and to ensure that they are making a profit.

Financial plan, financial planning

A financial plan is a document that outlines how a person or business plans to use their money. It includes things like your income, your assets, and your liabilities. Financial planning is the process of creating a financial plan and then implementing it. This involves setting goals, budgeting, and investing money wisely. Another one of the common Financial Terms.

FICO score

The FICO score is a measure of a person’s creditworthiness. It is calculated using a person’s credit history and current debt load. The FICO score is used by lenders to determine whether or not to lend money to a person and what interest rate to charge them.

Finance charges

Finance charges are the fees that are charged by lenders for borrowing money. These charges can include interest payments, late fees, and penalties for going over your credit limit. Finance charges can add up quickly and can significantly increase the cost of borrowing money.

Financial institutions

Financial institutions in finance are the various companies and organizations that provide financial services. This includes banks, credit unions, insurance companies, and investment firms. Financial institutions provide a variety of services, including banking, lending, insurance, and investment advice.

Financial literacy

Financial literacy is the ability to understand financial concepts and make informed financial decisions. Financial literacy includes things like understanding how to read a financial statement, how to save for retirement, and how to use credit wisely. Financial literacy is important because it helps people to manage their money effectively and make wise decisions about their finances. Another one of the common Financial Terms.

Fixed Expenses

In financial terms, fixed expenses are costs that do not change from month to month. This can include things like rent, car payments, and insurance premiums. Fixed expenses are important to track because they can have a big impact on your budget and your ability to save money.

Fraud

In financial terms, fraud is the intentional misrepresentation of information in order to deceive someone. In the context of finance, it can involve things like lying about your income or assets in order to get a loan, or forging a signature on a financial document. Fraud is a serious crime and can lead to significant financial losses for the victim. Another one of the common Financial Terms.

Front-end load

Front-end load is a type of commission that is charged by some mutual funds. It is a percentage of the amount that is invested in the fund, and it is paid to the person who sells the fund. Front-end loads can be expensive and can reduce the overall return on investment.

Grace Period

In financial terms, a grace period is the time that a borrower has to repay a loan before interest starts to accrue. During the grace period, the borrower is not required to make any payments on the loan. This gives them time to get their finances in order and to make arrangements for repayment. Another one of the common Financial Terms.

Gross Income

Gross income is the total amount of money that a person earns in a given year. It includes both their wages and their tips, as well as any other income they may have. Gross income is important to track because it can be used to determine how much money a person can afford to borrow.

High balling

In financial terms, high balling is the act of exaggerating the value of an asset in order to get a loan or investment. This can involve inflating the value of a stock or real estate property, or exaggerating the amount of income you earn. High balling is a form of fraud and can lead to significant financial losses for the victim.

Identity Theft

Identity theft is the unauthorized use of another person’s personal information in order to obtain financial gain. This can include things like using someone’s Social Security number to get a credit card, or opening a bank account in their name. Identity theft is a serious crime and can lead to significant financial losses for the victim. Another one of the common Financial Terms.

Implied warranty

An implied warranty is a type of warranty that is not stated explicitly in a contract, but is still assumed to be in effect. This can include things like the warranty of habitability for rental properties, or the warranty of merchantability for goods sold by a retailer. Implied warranties are important because they protect the consumer and ensure that they are getting what they paid for.

Impulse purchase

Impulse purchases are items that are bought on a whim, without any real thought or planning. They are often unplanned and unessential, and are usually purchased with the intent of satisfying a short-term need or desire. Impulse purchases can be harmful to your finances because they can lead to overspending and debt.

Income

Income is the total amount of money that a person earns in a given year. It includes both their wages and their tips, as well as any other income they may have. Income is important to track because it can be used to determine how much money a person can afford to borrow. Another one of the common Financial Terms.

Insurance 

Insurance is a contract between two parties in which the insurer agrees to pay for losses or damages that are incurred by the insured. This can include things like car insurance, health insurance, or homeowners insurance. Insurance is important because it helps protect people from financial losses in the event of an accident or disaster.

Insurance premium

An insurance premium is the amount of money that a person pays to purchase insurance. This is typically a monthly or yearly fee, and it is used to cover the cost of losses or damages that may be incurred by the insured. Insurance premiums are important because they help protect people from financial losses in the event of an accident or disaster.

Installment plan

An installment plan is a type of loan in which the borrower agrees to make regular payments over a period of time. This can include things like car loans, student loans, or personal loans. Installment plans are important because they allow people to spread out their payments over a longer period of time, making them more manageable. Another one of the common Financial Terms.

Interest

In financial terms, interest is the amount of money that is charged for the use of borrowed money. This is typically expressed as a percentage of the amount that is being borrowed, and it is used to compensate the lender for their risk. Interest is important because it helps to offset the cost of borrowing money.

Investment

An investment is a type of financial asset in which the holder expects to receive future payments. This can include things like stocks, bonds, or real estate. Investments are important because they provide a way to grow your money over time.

Late Fee

A late fee is a fee that is charged by a lender when a borrower misses a payment on a loan. This can include things like car loans, student loans, or personal loans. Late fees are important because they help to offset the cost of borrowing money. Another one of the common Financial Terms.

Lender

In financial terms, a lender is the party who provides money to a borrower in exchange for interest. Lenders are important because they provide a way for people to borrow money when they need it.

Liabilities

In financial terms, liabilities are any financial obligations that a person has. This can include things like car loans, student loans, or personal loans. Liabilities are important because they represent the amount of money that a person owes to others.

Liquidity

In financial terms liquidity is a measure of how easily a financial asset can be converted into cash. This is important because it helps to ensure that a person can quickly access their money if they need it. liquidity is important because it helps to protect people from financial emergencies. Another one of the common Financial Terms.

Loan sharks

Loan sharks are people who loan money to other people. They can charge a lot of interest for the loan, and they can be very dangerous if you don’t pay them back.

Loan Term

A loan term is the length of time over which a loan is repaid. This can be anything from a few months to a few years, and it helps to ensure that the borrower can afford the monthly payments. Loan terms are important because they help to ensure that borrowers can afford the monthly payments. Another one of the common Financial Terms.

Minimum payment

A minimum payment is the smallest amount of money that a person can pay on a loan each month. This is important because it helps to ensure that the borrower stays in good financial shape. Minimum payments are important because they help to protect people from financial emergencies.

Money market account

A money market account is a type of savings account that offers a high rate of interest. This is important because it helps to ensure that the money in the account grows over time. Money market accounts are important because they help to protect people from financial emergencies.

Money order

A money order is a type of payment that is used to pay for goods or services. It is similar to a check, but it is paid for in advance. Money orders are important because they provide a way to pay for goods or services without using a bank account. Another one of the common Financial Terms.

Mortgage

A mortgage is a type of loan that is used to purchase a home. This can be a fixed-rate mortgage or an adjustable-rate mortgage. Mortgages are important because they allow people to purchase a home without having to save up all the money upfront.

Mutual Fund

A mutual fund is a type of investment vehicle that is made up of a pool of money from a number of different investors. This money is then invested in a variety of different ways, and the profits are shared among the investors. Mutual funds are important because they provide a way for people to invest their money in a diversified way.

Net Income

Net income is the amount of money that a person earns after paying all of their expenses. This can include things like car payments, rent, or utilities. Net income is important because it represents the amount of money that a person has left over after they have paid their bills.

Net worth

Net worth is the total value of a person’s assets minus the total value of their liabilities. This can include things like car loans, student loans, or personal loans. Net worth is important because it represents the amount of money that a person has available to them. Another one of the common Financial Terms.

Open-ended credit

Open-ended credit is a type of credit that does not have a fixed repayment schedule. This means that the borrower can repay the loan at any time they choose. Open-ended credit is important because it allows people to borrow money without having to worry about when they will repay it.

Opportunity Cost

In financial terms opportunity cost is the value of the next best thing that a person could have done with their money. This is important because it helps to ensure that people are making the most of their money. Opportunity cost is important because it helps to ensure that people are making the most of their money.

Origination Fee

An origination fee is a charge that is assessed by a lender when a person takes out a loan. This fee helps to cover the costs of setting up the loan. Origination fees are important because they help to cover the costs of setting up the loan.

Payroll deductions

In financial terms payroll deductions are when you take some of your money out of your paycheck to pay for things like your car payment or rent. This is important because it helps you to save money over time.

Pay Yourself First (PYF)

Pay yourself first (PYF) is a term that is used to describe the act of saving money before you pay any of your bills. This is important because it helps to ensure that you have money saved for emergencies. Paying yourself first is important because it helps to ensure that you have money saved for emergencies. Another one of the common Financial Terms.

Personal Identification Number (PIN)

A Personal Identification Number (PIN) is a code that is used to authorize transactions. This code is typically given to people when they open a bank account. PINs are important because they help to protect people’s money from being stolen.

Philanthropy

Philanthropy is the act of donating money to charity. This can be done in a number of different ways, including through cash donations, stock donations, or by making a bequest. Philanthropy is important because it helps to support important causes and organizations. Another one of the common Financial Terms.

Points-mortgage

Points-mortgage refers to the upfront fee that is assessed by a lender when a person takes out a mortgage. This fee helps to cover the costs of setting up the loan. Points-mortgages are important because they help to cover the costs of setting up the loan.

Predatory lending

Predatory lending is a type of lending that is designed to take advantage of people. This can include things like charging high interest rates or hidden fees. Predatory lending is important because it can hurt people financially and can lead to them getting into debt. Another one of the common Financial Terms.

Profit

Profit is the amount of money that a company earns after accounting for all of their expenses. This can include things like salaries, rent, or advertising. Profit is important because it represents the amount of money that a company has left over after they have paid their bills.

Principal

In financial terms the principal is the amount of money that you borrow when you get a loan.

Resources

Resources are the items that a company uses to generate income. This can include things like factories, equipment, or land. Resources are important because they allow a company to produce goods or services.

Rate of return

Rate of return measures how successful an investment has been. This is calculated by dividing the profits earned by the amount of money that was invested. Rate of return is important because it allows people to compare different investments.

Return 

In financial terms, the term “return” typically refers to the amount of money that is earned on an investment. This can be calculated by dividing the profits earned by the amount of money that was invested. Returns are important because they allow people to compare different investments.

Reverse mortgage

A reverse mortgage is a type of loan that is designed for seniors. This loan allows people to borrow money against the equity that they have in their home. Reverse mortgages are important because they can help seniors to stay in their home as they age.

Revolving credit

Revolving credit is a type of loan that allows people to borrow money again and again as long as they continue to make payments. This type of loan is typically offered by banks or credit card companies. Revolving credit is important because it allows people to borrow money when they need it. Another one of the common Financial Terms.

Risk management

Risk management is the process of identifying and reducing the risks that a company faces. This can include things like assessing the likelihood of a disaster happening, or by creating contingency plans. Risk management is important because it helps to protect a company from financial losses.

Risk tolerance

Risk tolerance is the amount of risk that a person is willing to take on. This can include things like investing in stocks or mutual funds. Risk tolerance is important because it allows people to choose investments that fit their comfort level. Another one of the common Financial Terms.

Savings

Savings is the act of setting money aside to use in the future. This can be done by putting money into a bank account or by investing in stocks or mutual funds. Savings are important because they allow people to have a cushion of money that they can use when they need it.

Savings Account

In financial terms, a savings account is a type of account that allows people to save money. This type of account typically offers high interest rates and allows people to access their money when they need it. Savings accounts are important because they allow people to save money for the future.

Share Account

In finance, a share account is a type of account that allows people to invest in stocks. This type of account typically offers low interest rates and allows people to access their money when they need it. Share accounts are important because they allow people to invest in stocks.

Share Draft Account

In financial terms, a share draft account is a type of account that allows people to invest in stocks. This type of account typically offers low interest rates and allows people to access their money when they need it. Share draft accounts are important because they allow people to invest in stocks. Another one of the common Financial Terms.

Social security

In financial terms, social security is a government program that provides benefits to retired workers. This program is important because it helps retirees to live comfortably in retirement. Another one of the common Financial Terms.

Spending

In financial terms, spending is the act of using money to purchase goods or services. This can include things like groceries, gasoline, or cable TV. Spending is important because it allows people to live their lives.

Stock

In financial terms, a stock is a type of investment that allows people to own a piece of a company. This type of investment typically offers high returns, but it also carries a high level of risk. Stocks are important because they allow people to invest in companies.

Stock Market

A stock market is a place where people can buy and sell stocks. This place typically operates through a stock exchange, which is a place where stocks are bought and sold. The stock market is important because it allows people to invest in companies. Another one of the common Financial Terms.

Taxes

Taxes in finance are government-imposed fee that is paid on the income, profits, or value of the property. These fees are used to help fund government programs and services. Taxes are important because they help to fund government programs.

Time value of money 

The time value of money is the idea that money is worth more today than it will be in the future. This is because money can be used to earn interest, which allows it to grow over time. The time value of money is important because it allows people to make wise financial decisions. Another one of the common Financial Terms.

Traveler’s check

In finance, a traveler’s check is a type of check that can be used to withdraw money while traveling. This type of check is important because it allows people to have access to money while they are traveling.

Variable Expenses

Variable expenses are expenses that vary from month to month. This can include things like electricity, gasoline, or food. Variable expenses are important because they allow people to budget their money wisely. Another one of the common Financial Terms.

Wants

In financial terms, wants are items that people would like to have but do not necessarily need. This can include things like a new car or a vacation. Wants are important because they allow people to enjoy their lives.

Wealth-building

Wealth-building in finance refers to the act of saving money so that it can be used to generate income in the future. This is important because it allows people to create wealth for themselves. Another one of the common Financial Terms.

Withholding

Withholding in finance refers to the act of withholding money from employees’ paychecks. This is done to tax them on their income. Withholding is important because it helps to fund government programs.

Yield

In financial terms, the yield is a measure of how much money investment is making. This number is typically expressed as a percentage. The yield is important because it allows people to measure the profitability of an investment. Another one of the common Financial Terms.

In Conclusion

The financial terms explained above are important for anyone looking to be financially literate. By knowing what these financial terms mean, you can make sound financial decisions that will help you build wealth over time.