The glossary.

Every finance term we use, explained in plain language by category. No jargon on top of jargon — just what each word actually means.

BasicsSavingInvestingCreditIncomeBudgeting

Basics

Asset
Anything you own that has value and can grow — cash, investments, property, or even a valuable skill.
Liability
Money you owe, or something that takes money out of your pocket over time, like unpaid debt.
Inflation
The gradual rise in prices over time, which reduces what your money can buy. Your money loses value if it doesn’t grow.

Saving

Compound interest
Interest earned on both your original money and the interest you have already accumulated. Your money grows on itself.
Principal
The original amount of money you invest or borrow, before any interest is added.
Interest rate
The percentage charged on borrowed money or paid on saved money, usually expressed per year (APR / APY).
Rule of 72
A quick formula: divide 72 by your annual interest rate to estimate how many years it takes your money to double.

Investing

Stock
A share of ownership in a company. Its value rises and falls with the company’s performance.
Bond
A loan you give to a government or company, which pays you interest and repays the original amount later.
Index fund
A fund that holds thousands of companies at once, giving you instant diversification in one purchase.
Diversification
Spreading your money across many investments so that no single failure can wipe you out.
Risk tolerance
How much value fluctuation you can comfortably handle, usually tied to how long you can wait to use the money.

Credit

Credit score
A number lenders use to judge how reliably you repay borrowed money. Higher scores mean cheaper loans.
Credit utilisation
The percentage of your available credit limit you are currently using. Lower is better for your score.
APR
Annual Percentage Rate — the true yearly cost of borrowing, including fees, expressed as a percentage.

Income

Gross pay
Your total earnings before any taxes or deductions are taken out.
Net pay
Your take-home pay — what actually lands in your account after taxes and deductions.

Budgeting

Emergency fund
Savings set aside for unexpected costs, usually 3–6 months of expenses, so surprises don’t become debt.