Personal Finance Terms

Search through our broad glossary of Personal Finance Definitions to take control of your finances.

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  • A

Asset Allocation ➤

How investments are distributed across asset classes.
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  • B

Budget ➤

A financial plan for income and expenses.
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  • C

Compound Interest ➤

Interest calculated on both principal and accrued interest.
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  • D

Debt ➤

Money owed to lenders or creditors.

Dividend ➤

Money owed to lenders or creditors.
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  • E

Emergency Fund ➤

Savings for unexpected financial expenses.

Equity ➤

Ownership interest in an asset.

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  • F

Financial Independence ➤

The status of having enough income to pay for living expenses for the rest of one’s life without having to be employed or dependent on others.

Financial Advisor ➤

A professional for financial planning.

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  • G

Gross Income ➤

An individual's total earnings before deductions.

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  • H

High-Yield Savings Account ➤

A type of savings account that earns higher interest than a standard savings account.

Hedge Funds ➤

Pooled funds that employ different strategies to earn active return for their investors.

Health Savings Account (HSA) ➤

Account for medical expenses.

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  • I

Index Funds ➤

A type of mutual fund or ETF designed to match the performance of a market index.

Interest ➤

Cost of borrowing money.

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  • J

Joint Account ➤

A bank or brokerage account that is shared between two or more individuals.

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  • K

Key Rate ➤

An interest rate set by official authorities which forms the basis for other interest rates.

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  • L

Liabilities ➤

What is owed to others.

Liquidity ➤

The availability of liquid assets to a market or company.

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  • M

Mutual Funds ➤

An investment program funded by shareholders that trades in diversified holdings.

Mortgage ➤

Loan for real estate.

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  • N

Net Worth ➤

The amount by which assets exceed liabilities.

Net Income ➤

ncome after taxes and deductions.

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  • O

Overdraft ➤

Exceeding available bank account balance.

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  • P

Passive Income ➤

Earnings derived from a rental property, limited partnership, or other enterprise in which a person is not actively involved.

Principal ➤

Original amount borrowed or invested.

Portfolio ➤

A range of investments held by a person or organization.

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  • Q

Qualified Dividends ➤

Dividends that are subject to lower tax rates.

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  • R

Roth IRA ➤

An individual retirement account allowing a person to set aside after-tax income.

Refinance ➤

Replacing an existing loan with a new one.

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  • S

Stock Market ➤

Marketplace for buying and selling stocks.

Stocks ➤

Shares of a company’s ownership.

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  • T

Tax Deduction ➤

Expense reducing taxable income.

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  • U

Underwriting ➤

The process of evaluating the risk of insuring a home or financing a loan and establishing a price.

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  • V

Variable Expenses ➤

Costs that can change over time and are not fixed.

Variable Interest Rate ➤

Costs that can change over time and are not fixed.

Venture Capital ➤

Capital invested in a project in which there is a substantial element of risk.

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  • W

Whole Life Insurance ➤

A type of permanent life insurance that provides coverage for the life of the insured.

Withholding Tax ➤

Tax withheld from income.

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  • X

X-Efficiency ➤

The degree of efficiency maintained by individuals and firms under conditions of imperfect competition.

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  • Y

Yield ➤

The income return on an investment.

Equity ➤

Ownership interest in an asset.

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  • Z

Zero-Based Budgeting (ZBB) ➤

A method of budgeting in which all expenses must be justified for each new period.