Money Glossary

The 50/30/20 rule is a budgeting guideline that splits after-tax income into 50% for needs, 30% for wants, and 20% for savings and debt payoff.

A 401(k) is an employer retirement plan that lets you invest part of each paycheck, pre-tax (Traditional) or after-tax (Roth), with tax advantages.

A 529 plan is a tax-advantaged savings account for education costs, where earnings grow and can be withdrawn tax-free for qualified expenses.

Amortization is how a loan gets paid off over time through regular payments that cover interest first and then chip away at the principal.

An annuity is a contract where you pay an insurance company money and, in return, it pays you income on a schedule, often for the rest of your life.

Appreciation is the rise in an asset's value over time, the difference between what you paid for it and what it's worth now.

APR, or annual percentage rate, is the yearly cost of borrowing money, shown as a percentage that includes interest and some required fees.

APY, or annual percentage yield, is the total interest an account earns in one year, including the effect of compounding, shown as a percentage.

Asset allocation is how you divide your investments among categories like stocks, bonds, and cash, usually written as percentages.

Automatic investing means setting up recurring transfers so a set amount of money is invested for you on a regular schedule.

A bond is a loan you give to a government or company, which pays you interest along the way and returns your money at a set end date.

A brokerage account is a taxable investment account you open with a brokerage firm to buy and sell stocks, bonds, ETFs, and funds.

A bull market is a long stretch of rising stock prices, usually defined as a rise of at least 20% from a recent low.

Capital expenditure (CapEx) is money a business spends to buy, upgrade, or maintain assets like buildings, equipment, or vehicles used for more than a year.

A capital gain is the profit you make when you sell an asset, such as a stock or fund, for more than you paid for it.

Cash flow is the money coming in minus the money going out over a set period, such as a month. Positive cash flow means you have money left over.

Compound interest is interest you earn on your original money plus on the interest it has already earned, so your balance grows faster over time.

A credit report is a record of your borrowing and repayment history, kept by credit bureaus and used by lenders to judge your creditworthiness.

A credit score is a three-digit number, usually 300 to 850, that estimates how likely you are to repay borrowed money on time.

Credit utilization is the share of your available revolving credit you're using, found by dividing your card balances by your credit limits.

The debt avalanche is a payoff method where you pay minimums on all debts and put extra money toward the highest interest rate first.

The debt snowball is a payoff method where you pay minimums on all debts and put extra money toward the smallest balance first.

Diversification means spreading your money across many different investments so that one bad result has a smaller effect on your total.

A dividend is a payment a company makes to its shareholders out of its profits, usually in cash on a regular schedule.

Dollar-cost averaging means investing a fixed amount on a regular schedule, no matter the price, so you buy more shares when prices are lower.

An emergency fund is cash set aside in an easy-to-reach account to cover unexpected expenses or lost income without borrowing.

An employer match is money your employer adds to your workplace retirement account based on how much of your own pay you contribute.

Equities, or stocks, are shares of ownership in a company. Owning a share means you own a small piece of that business.

An exchange-traded fund (ETF) is a basket of investments you buy as a single share that trades on a stock exchange throughout the day.

An expense ratio is the annual fee a fund charges to manage your money, shown as a percentage of what you have invested in it.

A First Fix is the one money change Priceless Tay matches to each Money Type, a single step you can start this week instead of a whole new budget.

A health savings account (HSA) is a tax-advantaged account for medical costs, available if you have a high-deductible health plan.

A hedge fund is a private investment fund that pools money from wealthy investors and institutions and uses flexible, often complex strategies.

A high-yield savings account is a savings account that pays a higher interest rate than a typical savings account while keeping your money accessible.

Inconsistent income is earnings that change from month to month, like freelance, tip, commission, or business income, instead of a fixed paycheck.

An index is a rules-based list of companies that tracks how one slice of the stock market is doing, like the S&P 500.

An index fund is a mutual fund or ETF that holds every investment in a market index, so its returns follow that index instead of a manager's picks.

Inflation is the general rise in prices over time, which means each dollar buys a little less than it did before.

An interest rate is the percentage a lender charges to borrow money, or the percentage a bank pays you to hold your money, usually stated per year.

Liquidity is how quickly and easily an asset can be turned into cash without losing much of its value.

A market drop is when the prices of most investments, like stocks, fall at the same time, whether by a little or a lot.

Market timing is trying to guess the best moment to buy low and sell high in the stock market, instead of investing on a steady schedule.

A minimum payment is the smallest amount you must pay on a credit card or loan by the due date to keep the account in good standing.

A Money Date is a short, regular monthly check-in on your money system, used in Priceless Tay's method to keep your First Fix working.

Money Types are Priceless Tay's four money patterns, Spender, Saver, Scrambler, and Strategist, each describing what you do when money gets emotional.

A mutual fund pools money from many investors to buy a portfolio of stocks, bonds, or other investments that a professional manages.

Net worth is the value of everything you own (assets) minus everything you owe (liabilities) at a given point in time.

Nominal return is how much an investment grew on paper, the raw percentage you see before inflation, taxes, and fees are taken out.

An overdraft happens when you spend or withdraw more than your account balance, and the bank covers the shortfall, often for a fee.

Real return is how much your money truly grew after accounting for inflation, meaning the increase in what it can actually buy.

A Roth 401(k) is a workplace retirement plan funded with after-tax paycheck dollars, so qualified withdrawals later can come out tax-free.

A Roth IRA is an individual retirement account funded with after-tax money, where qualified withdrawals in retirement, including growth, are tax-free.

The Rule of 72 estimates how many years it takes money to double: divide 72 by the annual interest rate or rate of return.

A sinking fund is money you save a little at a time for a specific, expected expense, so the full cost is ready when it comes due.

A tax bracket is a range of taxable income taxed at a specific rate; in the US, each rate applies only to the income that falls within its range.

A traditional IRA is a retirement account where contributions may be tax-deductible, growth is tax-deferred, and withdrawals are taxed as income.

A unit investment trust (UIT) is a fixed portfolio of stocks or bonds that is set at creation and held until the trust's termination date.

Zero-based budgeting is a method where you assign every dollar of income a job, so income minus planned spending, saving, and debt payments equals zero.