Reference Guide
Financial Glossary
Clear, concise explanations of personal finance terms. From assets to compound interest, understand the concepts that matter for your financial journey.
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Financial Basics
Core concepts that form the foundation of personal finance.
14 termsPlanning & Goals
Essential concepts for setting and achieving financial goals.
7 termsInvesting & Growth
Key investment principles and strategies for building wealth.
4 termsMetrics & Calculations
Important financial metrics and formulas for informed decisions.
6 termsAll Terms A-Z
Annualized Rate of Return
The average annual growth rate of an investment, calculated using initial and final values over the holding period.
Metrics & CalculationsAsset Allocation
The distribution of investments across different asset classes like stocks, bonds, and cash to achieve a desired risk-return profile.
Investing & GrowthAsset Management
The process of managing investments and financial resources to achieve specific financial goals over time.
Investing & GrowthAssets
Valuable resources or possessions owned by an individual that have economic value, including real estate, stocks, bonds, cash, and vehicles.
Financial BasicsBudget
A financial plan that allocates income toward expenses, savings, and goals over a specific time period.
Financial BasicsCash Flow
The movement of money into and out of your accounts over a specific period of time, including income, expenses, and investments.
Financial BasicsCash Out
The process of converting investments or assets into liquid cash, making funds readily accessible for use.
Financial BasicsCompound Interest
Interest calculated on the initial principal and accumulated interest of previous periods, resulting in exponential growth over time.
Metrics & CalculationsCost of Living
The amount of money required to maintain a certain standard of living, including housing, food, healthcare, and other necessities.
Planning & GoalsDebt
Money owed to creditors or lenders, typically in the form of loans, credit card balances, mortgages, or other liabilities.
Financial BasicsDepreciation
The decrease in value of assets over time due to wear and tear, obsolescence, or other factors.
Metrics & CalculationsDiversification
Spreading investments across different asset classes, industries, or geographic regions to reduce risk.
Investing & GrowthEmergency Fund
Cash reserves set aside to cover unexpected expenses or income loss, typically 3-6 months of living expenses.
Planning & GoalsExpenses
Money spent or paid out for goods, services, bills, or other financial obligations.
Financial BasicsFinancial Data
Information about your finances that you manually track and manage, including assets, income, expenses, and investments.
Financial BasicsFinancial Goals
Specific, measurable money targets you set to achieve desired outcomes like buying a home, retiring early, or eliminating debt.
Planning & GoalsFinancial Independence
Having sufficient financial resources to cover living expenses and goals without relying on employment income.
Planning & GoalsFIRE
Financial Independence, Retire Early-a movement focused on aggressive saving and investing to achieve the option to stop working decades before traditional retirement age.
Planning & GoalsIncome
Money earned or received from sources such as employment, investments, rental properties, or other sources.
Financial BasicsInflation
The rate at which the general level of prices for goods and services rises over time, eroding purchasing power.
Financial BasicsInterest
The cost of borrowing money or the return earned on investments, expressed as a percentage of the principal amount.
Financial BasicsInvestment
The purchase of assets or securities with the expectation of generating income or capital appreciation over time.
Investing & GrowthLiabilities
Debts or financial obligations owed by an individual or entity, such as mortgages, loans, credit card debt, and other outstanding payments.
Financial BasicsLiquidity
The ease with which an asset or investment can be converted into cash without significantly affecting its market price.
Financial BasicsNet Worth
The difference between your total assets and total liabilities, representing your overall financial position and wealth.
Metrics & CalculationsProjection
Estimates or forecasts of future financial performance based on current data, anticipated activities, and market conditions.
Planning & GoalsRetirement
The period of life when an individual stops working full-time, relying on savings, investments, or pension income for living expenses.
Planning & GoalsReturn on Investment (ROI)
The profitability of an investment relative to its cost, calculated as the gain divided by the investment cost, expressed as a percentage.
Metrics & CalculationsSavings
Money set aside or reserved for future use, typically in a savings account or investment vehicle.
Financial BasicsSavings Rate
The percentage of income saved rather than spent, calculated as savings divided by gross or net income.
Metrics & CalculationsTax
Mandatory payments imposed by governments on income, property, goods, or services that fund public services and infrastructure.
Financial Basics