Glossary

Money words, explained simply.

122 terms from our courses, in plain English — each linked to the lesson that teaches it.

4

401(k): A retirement savings plan offered by an employer and funded from your paycheck, often with an employer match.; Learn it in: Retirement Basics (Money After High School)

5

50/30/20 guideline: A starting budget split: about 50% of take-home pay for needs, 30% for wants, and 20% for savings and extra debt payments.; Learn it in: Budgeting (Money Fundamentals)

A

A true emergency: Something that's unexpected, necessary, and urgent. All three. A sale on shoes is none of them.; Learn it in: Emergency Savings (Money Fundamentals)
APR (Annual Percentage Rate): The yearly cost of borrowing, as a percentage. For credit cards, the APR is the interest rate on balances you carry.; Learn it in: APR and Interest (Credit & Debt)
APY (Annual Percentage Yield): How much your money earns in one year, including the effect of compounding. A 4% APY on $1,000 earns about $40 in a year.; Learn it in: Savings Accounts (Money Fundamentals)
Asset allocation: How your portfolio is divided among types of investments — mainly stocks, bonds, and cash. It's usually the biggest driver of how much a portfolio swings.; Learn it in: Portfolio Basics (Investing)
Assets: Things the business owns that have value: cash, inventory, equipment, buildings, and money customers owe it (accounts receivable).; Learn it in: Assets, Liabilities, and Equity (Understanding Businesses)
Authorized user: Someone added to another person's credit card account who can use the card. The account's history may appear on their credit report.; Learn it in: Building Credit from Scratch (Money After High School)

B

Balance sheet: A snapshot of what a company owns (assets), what it owes (liabilities), and the owners' share (equity) on one date.; Learn it in: Reading a Balance Sheet (Understanding Businesses)
Barter: Trading goods or services directly for other goods or services, without money.; Learn it in: What Money Actually Is (Money Fundamentals)
Bond: A loan you make to a government or company in exchange for interest and the return of your money on a set date.; Learn it in: Bonds (Investing)
Brand: The promise people expect from you and the feeling they associate with you. A name, logo, and colors help, but a brand is built by delivering the same experience again and again.; Learn it in: Marketing and Branding (Entrepreneurship)
Break-even point: The number of sales needed to cover fixed costs: fixed costs ÷ contribution per unit. Below it, you lose money; above it, you profit.; Learn it in: Revenue Models and Costs (Entrepreneurship)
Budget: A plan for your money made before you spend: what comes in and where each dollar will go.; Learn it in: Budgeting (Money Fundamentals)
Business model: How a company makes money: who pays, for what, and how often.; Learn it in: Business Models (Understanding Businesses)

C

Capitalization: When unpaid interest is added to your loan balance. After that, you pay interest on the interest.; Learn it in: Student Loans (Money After High School)
Cash flow statement: A report of cash coming in and going out, split into operating, investing, and financing activities.; Learn it in: Cash Flow (Understanding Businesses)
Checking account: A bank account for everyday spending. Deposits come in; debit card purchases, transfers, and bill payments take money out.; Learn it in: Checking Accounts (Money Fundamentals)
Co-signer: A person who signs a loan with the borrower and is fully responsible for repaying it if the borrower doesn't.; Learn it in: Types of Loans (Credit & Debt)
Coinsurance: Your percentage share of covered costs after you've met the deductible.; Learn it in: Insurance Basics (Money After High School)
Collateral: Something of value a lender can take if a secured loan isn't repaid, like the car on an auto loan.; Learn it in: Types of Loans (Credit & Debt)
Competitive advantage: Something that protects a business's profits from competitors, such as a strong brand or network effects. Also called a moat.; Learn it in: Competitive Advantages (Understanding Businesses)
Compound interest: Interest earned on your original money plus the interest it has already earned — interest on your interest.; Learn it in: Compound Interest (Money Fundamentals)
Concentration risk: Depending heavily on one customer, supplier, or product. If that one relationship ends, a big part of the business goes with it.; Learn it in: Business Risk (Understanding Businesses)
Contribution per unit: Price − variable cost per unit. It's how much each sale contributes toward covering fixed costs, and then toward profit.; Learn it in: Revenue Models and Costs (Entrepreneurship)
Cost of attendance: The full yearly cost: tuition and fees, housing, food, books, transportation, and personal expenses.; Learn it in: College Costs and Scholarships (Money After High School)
Credit: Borrowing money now and repaying it later, usually with interest.; Learn it in: What Credit Is (Credit & Debt)
Credit history: The record of how you've handled borrowed money: what you borrowed, whether you paid on time, and how much you owe now.; Learn it in: What Credit Is (Credit & Debt)
Credit limit: The most you can owe on a credit card at one time.; Learn it in: How Credit Cards Work (Credit & Debt)
Credit report: A record of how you've borrowed and repaid, kept by the credit bureaus Equifax, Experian, and TransUnion.; Learn it in: What Credit Is (Credit & Debt)
Credit risk: The chance the borrower can't pay you back. Riskier borrowers have to offer higher interest to attract lenders.; Learn it in: Bonds (Investing)
Credit score: A number that estimates how likely you are to repay on time. FICO Scores run from 300 to 850; higher means lower risk.; Learn it in: Credit Scores (Credit & Debt)
Credit union: A member-owned, not-for-profit financial institution that offers accounts and loans, often with lower fees.; Learn it in: Banking on Your Own (Money After High School)
Credit utilization: How much of your available credit you're using. A $300 balance on a $1,000 limit is 30% utilization. Lower is better.; Learn it in: Credit Scores (Credit & Debt)
Current ratio: Current assets ÷ current liabilities. Above 1 means the business has more short-term resources than short-term bills. Much below 1 can signal trouble paying bills.; Learn it in: Reading a Balance Sheet (Understanding Businesses)

D

Debit card: A card that spends money you already have in your checking account. A credit card, by contrast, borrows money you'll have to pay back.; Learn it in: Checking Accounts (Money Fundamentals)
Debt avalanche: Paying extra on the highest-interest debt first while paying minimums on the rest. It saves the most interest.; Learn it in: Borrowing Responsibly (Credit & Debt)
Debt snowball: Paying extra on the smallest balance first while paying minimums on the rest, to build momentum with quick wins.; Learn it in: Borrowing Responsibly (Credit & Debt)
Debt-to-equity ratio: Total liabilities ÷ equity. Higher means more of the business is funded by borrowing, which increases risk when times are tough.; Learn it in: Reading a Balance Sheet (Understanding Businesses)
Debt-to-income ratio (DTI): Your monthly debt payments divided by your gross monthly income. Lenders use it to judge whether you can take on more.; Learn it in: Borrowing Responsibly (Credit & Debt)
Deductible: The amount you pay for covered costs before insurance starts paying.; Learn it in: Insurance Basics (Money After High School)
Depreciation: The loss of value over time. New cars lose value fastest in their first few years.; Learn it in: Buying and Financing a Car (Money After High School)
Diversification: Spreading money across many investments so that one bad result can't do too much damage.; Learn it in: Diversification (Investing)
Dividend: A payment a company makes to its shareholders, usually from its profits.; Learn it in: Stocks (Investing)
Dollar-cost averaging: Investing a set amount on a regular schedule, like $50 every month, no matter what the market is doing. You buy more shares when prices are low and fewer when they're high, and you never have to guess the "right" time.; Learn it in: Compound Growth in Investing (Investing)

E

Effective tax rate: Your total tax divided by your total income.; Learn it in: Taxes 101 (Money After High School)
Emergency fund: Savings kept only for true emergencies — costs that are unexpected, necessary, and urgent.; Learn it in: Emergency Savings (Money Fundamentals)
Employer match: Money your employer adds when you contribute — for example, 100% of what you put in, up to 4% of your pay. Not contributing enough to get the full match leaves free money on the table.; Learn it in: Retirement Basics (Money After High School)
Equity: What's left for the owners after subtracting liabilities from assets. It includes money owners put in plus profits kept in the business.; Learn it in: Assets, Liabilities, and Equity (Understanding Businesses)
Expense ratio: The yearly fee a fund charges, as a percentage of your money. A 1% expense ratio costs $10 a year for every $1,000 invested — every year.; Learn it in: Funds, ETFs, and Index Funds (Investing)
Expenses: What it costs to run the business: ingredients, wages, rent, marketing, equipment, and more.; Learn it in: How Businesses Make Money (Understanding Businesses)

F

FAFSA: The Free Application for Federal Student Aid — the form that unlocks federal grants, work-study, and student loans, and much state and college aid.; Learn it in: College Costs and Scholarships (Money After High School)
FDIC insurance: Protection for deposits at insured banks — up to $250,000 per depositor, per bank, per ownership category. Credit unions have similar NCUA insurance.; Learn it in: Checking Accounts (Money Fundamentals)
FICA: Payroll taxes for Social Security (6.2%) and Medicare (1.45%) withheld from most paychecks.; Learn it in: Understanding Your Paycheck (Money After High School)
Fixed costs: Costs that stay the same no matter how much a business sells, like rent.; Learn it in: How Businesses Make Money (Understanding Businesses)
Free cash flow: Operating cash flow minus spending on long-term assets. It's the cash a business actually generates that it could use to grow, repay debt, or return to owners.; Learn it in: Cash Flow (Understanding Businesses)

G

Grace period: The time between a card statement and its due date. Paying the full statement balance by the due date usually means no interest on purchases.; Learn it in: How Credit Cards Work (Credit & Debt)
Grant: Financial aid you don't have to repay, usually based on financial need.; Learn it in: College Costs and Scholarships (Money After High School)
Gross pay: Total pay before taxes and deductions.; Learn it in: Understanding Your Paycheck (Money After High School)
Gross profit: Revenue minus the direct cost of the goods sold.; Learn it in: Profit and Margins (Understanding Businesses)

H

Hard vs. soft inquiry: When you apply for credit, the lender makes a "hard" inquiry, which can lower your score slightly for a while. Checking your own score is a "soft" inquiry and has no effect.; Learn it in: Credit Scores (Credit & Debt)

I

Income statement: A report of a company's revenue, expenses, and profit over a period of time.; Learn it in: Reading an Income Statement (Understanding Businesses)
Index fund: A fund that tracks a market index, like the S&P 500, instead of trying to pick winning investments.; Learn it in: Funds, ETFs, and Index Funds (Investing)
Inflation: A general rise in prices over time, so each dollar buys a little less.; Learn it in: Inflation (Money Fundamentals)
Interest: The price of using money. Savers earn it; borrowers pay it.; Learn it in: Compound Interest (Money Fundamentals)
IRA: An individual retirement account you open yourself. A Traditional IRA can lower taxes now; a Roth IRA allows tax-free qualified withdrawals later.; Learn it in: Retirement Basics (Money After High School)

L

Lease: A legal contract covering rent, due dates, late fees, length, pets, guests, repairs, and what happens if you move out early. Read all of it before you sign.; Learn it in: Renting Your First Place (Money After High School)
Ledger: A simple record of every dollar that comes in and goes out.; Learn it in: Basic Accounting for Founders (Entrepreneurship)
Leverage: Using borrowed money. Debt magnifies results: profits look bigger in good times, but fixed interest payments can crush a business when sales fall.; Learn it in: Business Risk (Understanding Businesses)
Liabilities: What the business owes others: loans, unpaid bills to suppliers (accounts payable), and wages owed.; Learn it in: Assets, Liabilities, and Equity (Understanding Businesses)

M

Margin: A profit number divided by revenue, shown as a percentage. A 10% net margin means the company keeps 10 cents of every dollar of sales.; Learn it in: Profit and Margins (Understanding Businesses)
Marginal tax rate: The tax rate on your last dollar of income.; Learn it in: Taxes 101 (Money After High School)
Market capitalization: A company's total stock market value: share price × number of shares. It's how people compare the size of public companies.; Learn it in: Stocks (Investing), What Is a Company Worth? (Understanding Businesses)
Market index: A list that tracks part of the market. The S&P 500, for example, tracks about 500 large U.S. companies.; Learn it in: Funds, ETFs, and Index Funds (Investing)
Market research: Learning about potential customers, their problems, and competitors — before and while building a business.; Learn it in: Customers and Market Research (Entrepreneurship)
Markup: The amount added to a product's cost to set its price, often shown as a percent of cost.; Learn it in: Pricing (Entrepreneurship)
Minimum payment: The smallest payment a card issuer accepts without a late fee. Paying only the minimum means paying far more interest over time.; Learn it in: APR and Interest (Credit & Debt)
Minimum viable product (MVP): The simplest version of your product that actually solves the problem for real customers — so you can learn whether it works before investing a lot.; Learn it in: Creating a Product (Entrepreneurship)
Money: Anything people widely accept in exchange for goods and services. Its value comes from shared trust that others will accept it too.; Learn it in: What Money Actually Is (Money Fundamentals)
Mutual fund and ETF: Funds that pool many investors' money to buy many investments at once. ETFs trade on an exchange throughout the day; mutual funds are priced once a day.; Learn it in: Funds, ETFs, and Index Funds (Investing)

N

Needs and wants: Needs are things you must have to live and work, like housing, basic food, and transportation. Wants make life nicer but aren't essential.; Learn it in: Needs vs. Wants (Money Fundamentals)
Net income: The bottom line: profit after every expense, including interest and taxes.; Learn it in: Reading an Income Statement (Understanding Businesses)
Net price: What college actually costs you: the cost of attendance minus grants and scholarships.; Learn it in: College Costs and Scholarships (Money After High School)
Network effect: When a product becomes more valuable as more people use it.; Learn it in: Competitive Advantages (Understanding Businesses)

O

Objection: A reason a customer hesitates — price, timing, trust, or doubt it'll work. It's usually a request for more information.; Learn it in: Sales (Entrepreneurship)
Out-of-pocket maximum: The most you'll pay for covered, in-network care in a plan year. After that, the plan pays 100% of covered costs.; Learn it in: Insurance Basics (Money After High School)
Overdraft: Spending more than is in your account. The bank may decline the payment, or cover it and charge an overdraft fee.; Learn it in: Checking Accounts (Money Fundamentals)

P

Payday loan: A small, short-term loan due on your next payday, with a fee. According to the Consumer Financial Protection Bureau, a typical two-week payday loan fee of $15 per $100 borrowed works out to an APR of almost 400%.; Learn it in: Debt Traps (Credit & Debt)
Pitch: A short, clear explanation of a business idea, usually ending with a specific ask.; Learn it in: Pitching Your Idea (Entrepreneurship)
Portfolio: All of your investments together.; Learn it in: Portfolio Basics (Investing)
Premium: The regular amount you pay to keep an insurance policy.; Learn it in: Insurance Basics (Money After High School)
Price-to-earnings (P/E) ratio: Share price ÷ earnings per share — or, for the whole company, market cap ÷ net income. It shows how many dollars investors pay for each $1 of yearly profit.; Learn it in: What Is a Company Worth? (Understanding Businesses)
Principal and term: The principal is the amount you borrow. The term is how long you have to repay it — for example, 60 months.; Learn it in: Types of Loans (Credit & Debt)
Profit: What's left after subtracting all expenses from revenue.; Learn it in: How Businesses Make Money (Understanding Businesses)
Purchasing power: How much a given amount of money can buy.; Learn it in: Inflation (Money Fundamentals)

R

Real return: What your money earns after accounting for inflation. A rough estimate: your interest rate minus the inflation rate.; Learn it in: Inflation (Money Fundamentals)
Rebalancing: Bringing your mix back to its target. If stocks grow faster, they become a bigger share of your portfolio than you planned; rebalancing trims them back.; Learn it in: Portfolio Basics (Investing)
Renters insurance: Insurance that covers a renter's belongings and liability.; Learn it in: Renting Your First Place (Money After High School)
Return: What an investment earns or loses, usually shown as a percentage per year. Returns are never guaranteed.; Learn it in: What Investing Is (Investing)
Revenue: The money a business brings in from selling its products or services. For many businesses, revenue = price × quantity sold.; Learn it in: How Businesses Make Money (Understanding Businesses)
Risk tolerance: How much volatility you can handle, financially and emotionally. If a 30% drop would make you panic and sell, that's important to know before you invest.; Learn it in: Risk and Time Horizon (Investing)
Rule of 72: A shortcut for doubling time: divide 72 by the yearly rate to estimate how many years money takes to double.; Learn it in: Compound Interest (Money Fundamentals)

S

Savings account: A bank account for money set aside for goals and emergencies. It pays interest.; Learn it in: Savings Accounts (Money Fundamentals)
Scholarship: Money for school you don't have to repay, usually awarded for merit, talents, or other criteria.; Learn it in: College Costs and Scholarships (Money After High School)
Secured credit card: A credit card backed by a cash deposit that usually sets the credit limit — a common way to start building credit.; Learn it in: Building Credit from Scratch (Money After High School)
Secured vs. unsecured: A secured loan is backed by something the lender can take if you stop paying — like repossessing a car. An unsecured loan isn't, so it usually costs more.; Learn it in: Types of Loans (Credit & Debt)
Security deposit: Money paid to a landlord at move-in and returned at move-out, minus allowed deductions for damage or unpaid rent.; Learn it in: Renting Your First Place (Money After High School)
Simple interest: Interest paid only on the original amount, not on interest already earned.; Learn it in: Compound Interest (Money Fundamentals)
Social proof: Evidence that other people use and like what you offer — reviews, testimonials, before-and-after photos, customer counts. It's persuasive because it's real.; Learn it in: Marketing and Branding (Entrepreneurship)
Speculating: Betting on short-term price moves, usually with more risk than long-term investing.; Learn it in: Portfolio Basics (Investing)
Stock: A share of ownership in a company.; Learn it in: Stocks (Investing)
Subsidized loan: A federal student loan that doesn't charge interest while you're in school at least half-time.; Learn it in: Student Loans (Money After High School)

T

Take-home pay: Pay after taxes and other deductions — what actually reaches your account. Also called net pay.; Learn it in: Budgeting (Money Fundamentals)
Target customer: The specific group of people who have the problem most and are most likely to pay for a solution. "Everyone" isn't a target customer.; Learn it in: Customers and Market Research (Entrepreneurship)
Target-date fund: A fund that gradually shifts from stocks toward bonds as a chosen year, such as a retirement year, gets closer.; Learn it in: Portfolio Basics (Investing)
Tax bracket: A range of income taxed at one rate. Only the income inside a bracket is taxed at that bracket's rate.; Learn it in: Taxes 101 (Money After High School)
Time horizon: How long until you need the money. It's one of the most important factors in how much risk makes sense.; Learn it in: Risk and Time Horizon (Investing)

U

Unsubsidized loan: A federal student loan that charges interest from the day it's paid out.; Learn it in: Student Loans (Money After High School)

V

Value-based pricing: Setting a price based on what a product is worth to customers, rather than only on what it costs to make.; Learn it in: Pricing (Entrepreneurship)
Variable costs: Costs that rise and fall with each sale, like materials.; Learn it in: How Businesses Make Money (Understanding Businesses)
Volatility: How much an investment's value swings up and down. Stocks are more volatile than bonds, and bonds more than savings accounts.; Learn it in: Risk and Time Horizon (Investing)

W

W-4: A form you give your employer that tells them how much federal income tax to withhold from each paycheck.; Learn it in: Understanding Your Paycheck (Money After High School)