Personal Finance
"A ton of money" is a slang term for "a lot of money" For example, if something is very expensive, you might say, "It costs a ton of money." If you're optimistic about a new investment, you might sa...
An abacus is a counting device that performs basic mathematical functions. The abacus is believed to have been developed in the ancient Near East in the third millennium BCE. An abacus consists of a...
An account balance is a statement of how much money is in an account. For example, let's say John Doe deposits $100 into a new bank account. He withdraws $45 the next day. Then he deposits $20. His ...
Also called an account hold, an account freeze occurs when a bank or other financial institution prevents any transactions from hitting an account. For example, let's say John Doe is selling drugs f...
Also called an account freeze, an account hold occurs when a bank or other financial institution prevents any transactions from hitting an account. For example, let's say John Doe is selling drugs f...
The adjusted balance method determines the finance charges on an account once all credits and debits for the accounting period have been posted. The adjusted balance method is used to determine the ...
Alimony is a series of payments made to an ex-spouse or separated spouse according to a divorce decree or separation agreement. Also known as "spousal support," the idea behind alimony is to provide...
An amortization schedule is a chart that shows the amounts of  principal and interest due for each loan payment of an amortizing loan. An amortizing loan is a loan that requires regular payments, wh...
An appraisal is an estimate of the market value of an item by a certified professional. Appraisals can be assigned to nearly any item, including real estate. Appraisals are conducted by individuals ...
ACH, which stands for or Automated Clearing House, is a fund transfer system operated by NACHA, the National Automated Clearing House Association.   Launched in 1974, ACH is used for a wide range of...
An automatic investment plan (AIP) is a strategy whereby an investor can arrange for funds to transfer into an investment account automatically on a regular basis. Let's assume you want to save mone...
The Babcock School of Management is the business school at Wake Forest University. Located in Winston-Salem, North Carolina, the Babcock School of Management offers a full-time MBA program with an e...
Back up the truck is slang for bullish sentiment about a market or security. In the transportation world, drivers often back up the truck when they’re getting ready to get a load from a warehouse....
A bad check is a check written on an account that doesn't have enough funds to cover the amount of the check. For example, let's assume that John has $1,000 in his checking account today. He goes to...
Also called overdraft protection, balance protection is a feature on a checking account that prevents a customer from bouncing checks. A bad check is a check written on an account that doesn't exist...
Balance reporting is the act of communicating the balance in an account. Banks do balance reporting when a customer inquires about the balance in an account. For businesses, balance reporting is oft...
A balanced investment strategy is a method of portfolio allocation. Let's assume that John Doe has $500,000 in his portfolio. He does not want to take on too much risk but is worried about not takin...
A ballpark figure is an estimate. Let's say John Doe is at a cocktail party and meets Jane Smith, who runs a contracting company. John mentions that he wants to have his driveway repaved but doesn't...
A bank card is a plastic card issued by a financial institution that allows the user to make purchases with funds either borrowed from or held at that financial institution. The most common bank car...
Bank debits are reductions in customer accounts. Let's say you write a check at Target for $50. Your bank, Bank XYZ, will debit your account by $50. This is a bank debit. Your bank may also debit yo...
A bank identification number (BIN) identifies and verifies parts of a bank transaction. For example, when you purchase something with your Visa card, the vendor and the payment processor receive a s...
Belt and suspenders is a term to describe a risk-averse person or situation. The term refers to the act of wearing redundant items to hold up a pair of pants.   For example, let's assume John Doe i...
When a check is refused by a bank and returned to the person who wrote it due to insufficient funds, it is called a bounced check. Checks should be written for an amount that is less than or equal t...
A broker is a person or a company that acts as an intermediary between buyers and sellers. Brokers exist not just in the financial markets, but in the real estate market, the commodities market, the ...
A caisse populaire is a Canadian financial institution that is owned and controlled by its members rather than shareholders. It is essentially a credit union. Most are in Quebec. The members of the ...
A canceled check is a check that has cleared or prevented from clearing. Let's say John Doe writes a $100 check to Jane Smith. She takes it to her bank to cash it. The bank takes the check, deposits...
A cancellation bulletin is a list of credit cards that are reported stolen, canceled or compromised in some way.  A cancellation bulletin is also called a "warning bulletin," "hot list" or "restric...
A cash advance is a high interest loan typically taken out on a credit card or a line of credit from a bank. Interest on a cash advance begins accruing immediately upon disbursement. Suppose John us...
A cashier's check is a check that guarantees the availability of the underlying funds because it is drawn upon and issued by the bank itself. To obtain a cashier's check, a person must first deposit...
A certified check is a check for which the issuing bank guarantees payment. Let's assume you want to rent an apartment from the XYZ Leasing Company but your credit is bad. XYZ Leasing Company may re...
Certified Financial Planner (CFP) is a professional designation attained by a financial planner or advisor who has successfully completed the requirements set by the Certified Financial Planner Boar...
Relatively new to the financial planning and advice sector, a Certified Kingdom Advisor (CKA) is a professional certification for financial advisors who work with clients who take a Christian values ...
A chargeback protects cardholders from unsatisfactory sales and service by letting the cardholder demand a "refund" directly from the credit card issuer. If a customer successfully disputes a credit ...
Checkable deposits are bank accounts against which checks can be drawn. There are different types of checkable accounts offered by retail banks and credit unions: deposit accounts, interest-bearing a...
Banks offer different types of savings accounts any time of year. A way to save money toward holiday shopping and seasonal spending is a Christmas Club account. It is marketed to savers as an incenti...
The College Work Study Program (CWSP) is a type of financial aid that a school awards to a student who has completed a FAFSA and has demonstrated a financial need. The student is given a job (usually...
A conservatorship is the legal establishment of a court appointed manager for the personal and financial affairs of someone who is legally incapacitated, also referred to as a ward. The ward may be p...
Consignment is an agreement between an owner and a third-party consignee whereby the consignee agrees to sell the owners goods in exchange for a fee.  Consignment is an arrangement in which an item...
Contactless payment technology allows transactions through a chip embedded in payment cards, tags, key fobs, or mobile phones. A chip or QR code communicates with a reader device using radio frequenc...
A credit card balance is the total amount of money owed on a credit card account. Whenever a purchase is made, the balance increases. Conversely, whenever a payment is made, the balance decreases. Th...
A credit union is a financial institution that is owned and controlled by its members rather than shareholders. The members of the credit union pool their deposits and provide loans and other financi...
A daily money manager (DMM) is a person who manages day-to-day financial responsibilities for clients. For example, let’s assume John Doe is elderly and lives alone. His wife, who used to handle t...
In finance, to dehedge is to engage in an investing strategy that does not protect an investment or portfolio against loss. It usually involves securities that move in the same direction. Let's assu...
A demand deposit is an account with a bank or other financial institution that allows the depositor to withdraw his or her funds from the account without warning or with less than seven days' notice....
The deposit interest rate is the rate of interest earned on a deposit account held by a depositor at a bank or savings institution. Common types of deposit accounts include savings accounts, interest...
Direct deposit refers to the electronic transfer of a cash payment into the recipient's bank account. Direct deposit is a method of payment where a paying party, such as an employer or government ag...
Discretionary income is the income left over after paying taxes and normal living expenses. Discretionary income is the income remaining after the essentials (taxes, food, clothing, shelter, etc.) h...
Disposable income, also known as net pay, refers to the income that’s left for personal spending after direct taxes, such as federal and state income taxes, have been accounted for. It is a key con...
Early withdrawal refers to a depositor's or investor's withdrawal of funds from an account before the agreed-upon withdrawal date. Early withdrawals usually incur penalties. Individual retirement ac...
Earning potential often refers to the top salary for a particular field or profession. In the finance world, the meaning is not much different: earning potential is the biggest profit a company could...
An education IRA, now more formally known as a Coverdell Education Savings Account (or Coverdell ESA), is a tax-advantaged savings account intended to help parents and guardians prepare for the expen...
An electronic funds transfer (EFT) allows payment between two parties by using electronic signals to transfer money. The current systems of electronic funds transfer began in the 1960s but became wid...
The expected family contribution (EFC) is the amount of money that a family is expected to contribute toward a student's college tuition or expenses in a given year. Upon completion and submission o...
The Fair and Accurate Credit Transactions Act (FACTA) allows consumers to get a free credit report from the three major credit reporting agencies every 12 months in order to help prevent identity the...
The Federal Work Study Program (FWSP) is a form of financial aid awarded to a student who has completed a FAFSA and has demonstrated a financial need. The student is given a job (usually on-campus) a...
A FICO score, created and calculated by the Fair Isaac Corporation, is a measure of an individual's creditworthiness. It is a mathematical summary of the information on a person's credit report. FIC...
A financial advisor (also sometimes spelled "financial adviser") is an educated investment professional who helps people and businesses set and meet long-term financial goals. A financial advisor is...
A financial planner is a credentialed professional who, for a fee, assists individuals and organizations in reaching their financial goals and increasing their net worth through careful investing and...
A forgivable loan is a type of loan in which some (or all) of the amount can be forgiven or deferred if the borrower meets certain conditions. Since the loan balance is waived when the requirements a...
The free application for federal student aid (FAFSA) is a form filled out by college or graduate students who are eligible for government-sponsored financial aid. Every year, a college or graduate s...
Free lunch is a phrase used to describe getting something for nothing. There is no such thing as a free lunch. There are many things in life that seem to come for free: clean air, elementary school...
A frozen account refers to a situation where an individual is unable to withdraw money from a bank account due to a court order. A bank account is commonly frozen when the account holder owes money ...
A full-time student is a person enrolled in a post-secondary institution of learning who is taking at least the minimum number of course credit hours according to the institution's requirements. Alt...
A person is fully vested when a financial instrument or account becomes wholly owned by the investor. Let's assume John Doe receives options to buy 2,000 shares of Company XYZ, his employer, for $10...
Gross earnings, also known as gross income, represents income before taxes or adjustments. In the accounting world, gross earnings are usually the same thing as gross profit (that is, revenue minus ...
Group banking is offered by some banks to incentivize a whole group of people, like employees of a company, to have a relationship with the banking institution. A bank may team up with a large emplo...
A half-commission man introduces potential clients to financial advisors in return for a cut of the commissions those advisors earn from the new clients. Let's say John Doe knows Jane Smith, who has...
A hard money loan is a short-term loan that uses the value of real property owned by the borrower as its collateral. A hard money loan provides money for short-term expenses similar to a bridge loan...
Hard skills are quantifiable capabilities required for specific occupations. They are the opposite of soft skills. Careers require practitioners to have certain practical and personal abilities. Har...
High Earners, Not Rich Yet (HENRYs) are young, usually well educated, and highly paid but have not accumulated significant wealth yet. HENRYs often earn $250,000 to $500,000 per year per household, ...
A hot list is a list of credit cards that are reported stolen, canceled or compromised in some way.  A hot list is also called a "warning bulletin," "restricted card list" or "cancellation bulletin...
A household employee is a person who provides paid services within a private home. These services are often subject to payroll taxes. According to the Internal Revenue Service, these types of worker...
An identity fraud reimbursement program is an insurance-like product that reimburses the holder for expenses related to dealing with being a victim of identity theft. Let's say John Doe happens to s...
Income is an actual or recorded inflow of cash or other assets. The term is used in many different contexts. Let's say John Doe works for Company XYZ. His salary is $100,000 per year. This is his in...
An investment advisor makes investment recommendations to clients and can also be known as a financial advisor. A investment advisor is similar to a financial planner, investment manager, investment...
An itemized statement is a detailed record of certain activity that has occurred in an account for a given period of time. Monthly bank statements for common checking accounts often are itemized sta...
Job hunting expenses are costs that job seekers incur while searching for a new job. Job hunting involves research and networking using various resources and services. These resources and services i...
A joint account is any type of bank account held by two or more persons. All members of a joint bank account are responsible for any liabilities in connection with the account. Actions taken on the ...
Joint credit is credit extended by a lender to two or more parties. Loans secured from joint credit are the responsibility of all parties. Two or more parties may apply for joint credit with a lende...
Joint endorsement is a requirement by many banks that checks be endorsed by all parties of a joint account. If two or more individuals jointly hold a bank account, the bank may require a joint endor...
Kiasu can be good and bad. It can encourage people to persevere and create amazing results; it can also waste time and energy. In the investing world, it can create an irrational fear of losing. Kia...
Kiting is the illegal practice of exploiting settlement delays to transfer unavailable funds from one bank account to another. In the brokerage industry, kiting occurs when a securities firm fails t...
A lemon is an item whose defects were not outwardly apparent at the time that it was sold to a consumer.  ”Lemon” has typically referred to a defective new car but its current application has b...
In finance, limited risk describes any investing strategy intended to protect an investment or portfolio against loss. Limiting risk usually involves securities that move in the opposite direction th...
There comes a time in everyone’s life where they need to finance a major purchase. It may be a car loan, a line of credit for a business, or even the cornerstone of the American dream: a home loan....
M banking is the use of a smartphone or other cellular phone to conduct tasks such as monitoring account balances, transferring funds between accounts, bill payment and locating an ATM while away fro...
Magna cum laude is Latin for with great honor. Let's say John Doe is about to graduate college. He has a very high grade point average and has earned several awards from the finance department in wh...
A Master of Business Administration (MBA) is a graduate degree in business. An MBA typically involves the study of accounting, financial markets and instruments, corporate strategy, negotiation, bus...
A Master of Public Administration (MPA) is a graduate degree in public administration. An MPA typically involves the study of management, government, public policy, ethics and law. Most MPA programs...
Medicare is the United States federal government health insurance program for Americans who are 65 years of age and older. When a U.S. citizen turns 65 years old, he may be eligible for Medicare ben...
Mobile banking refers to the use of a smartphone or other cellular device to perform online banking tasks while away from your home computer, such as monitoring account balances, transferring funds b...
Mobile phone banking is the use of a smartphone or other cellular device to accomplish tasks such as checking account balances, transferring funds between accounts, bill payment and finding an ATM wh...
Money market accounts are a type of savings account that can be opened at any bank or credit union. Money market accounts usually offer higher interest rates than checking accounts and also allow ind...
A money market fund is a type of mutual fund that invests in high quality, short-term debt securities. Money market funds are characterized by high liquidity, meaning they can be readily converted in...
Money market accounts (also known as high-yield savings accounts) offer a safe way to earn returns on your money while still keeping access to the funds. The returns you earn are based on the money m...
A mortgagee is a lender in a mortgage, usually a bank, credit union, or other lending institution. A mortgagee lends money to a borrower for the purpose of purchasing real estate (usually a house) in...
A mutual savings bank (MSB) is a type of financial institution that functions much like a bank, but with a different ownership structure. Instead of shareholders owning marketable shares, a mutual sa...
A negotiable order of withdrawal account (NOW) is an interest-earning bank account in which the account holder can write checks against the balance. Most mutual savings banks, commercial banks, savin...
A nest egg is a slang term describing money saved for the future. For example, let's say that John Doe works at Company XYZ. He saves $300 a week for 40 years. At the end of the 40 years, he has $70...
Net proceeds refers to the amount of money remaining after an asset has been sold and related expenses have been paid. For example, a homeowner sells his house for $100,000. After deducting real est...
Net worth refers to the total value of an individual or company expressed as total assets less total liabilities. The net worth of an individual is simply calculated as total assets (e.g. home equit...
In most states, writing a bad check is at least a misdemeanor, with the consequences growing depending on the state, the amount involved, and whether the transaction crosses state lines. Most NSFs ar...
An offline transaction, also known as a signature debit transaction, is a payment method that uses a debit card to transfer funds from a checking account to a merchant across a digital credit card ne...
Online banking enables bank customers to handle account management and perform account transactions directly with the bank through the internet.  This is also known as internet banking. Most banks ...
An online transaction, also known as a PIN-debit transaction, is a password-protected payment method that authorizes a transfer of funds over an electronic funds transfer (EFT) When you pay for good...
In most states, writing a bad check is at least a misdemeanor, with the consequences growing depending on the state, the amount involved and whether the transaction crosses state lines. Most overdraf...
A package deal combines several products, discounts, features or services as one transaction. Let's say John Doe is considering taking a cruise. He could purchase his airfare and cruise separately f...
Paid-up means that all payment obligations under a contract are met. Let's say John Doe takes out a car loan to purchase a 1985 Camaro. The loan requires 60 monthly payments of $141. John misses a f...
A paper millionaire is a person who has at least $1 million of unrealized gains. Let's say John Doe starts a business. He invests all of his $50,000 savings, and soon the business takes off. Four ye...
A passbook savings account is the classic name for a traditional savings account. Though it may seem quaint now, tellers record the deposits, withdrawals, and interest earned for account holders in a...
Passive management is an investment strategy whereby an investor or financial advisor makes long-term investments in certain securities and is not influenced by short-term market fluctuations. The ma...
Pay yourself first is a phrase referring to the idea that investors should routinely and automatically put money into savings before spending on anything else. For example, let's assume you bring ho...
A paycation is when an employee takes paid vacation from his or her employer and works at another job. Let's say John Doe has earned two weeks of paid vacation at Company XYZ. He takes two weeks off...
Paycheck-to-paycheck means a lifestyle in which a person does not save money and would incur significant financial stress if he or she does not receive his or her next paycheck. For example, let's s...
A pension plan is an arrangement to provide employees with an income when they are no longer earning a regular income from employment. A pension plan is usually a type of retirement plan that gives ...
Person-to-person payments (P2P) is an online technology that allows customers to transfer funds from their bank account or credit card to another individual's account via the Internet or a mobile pho...
Personal income, aka "before-tax income," is the total annual gross earnings of an individual from all income sources, such as: salaries and wages, investment interest and dividends, employer contrib...
Personal property is a class of property that can be moved from one location to another. Generally, real property is a class of property that cannot be moved.  It includes land and buildings, for e...
A PIN-debit transaction, also known as an online transaction, is a password-protected payment method that authorizes a transfer of funds over an electronic funds transfer (EFT) When you pay for good...
A pre-tax contribution is a payment made with money that has not been taxed.   Anybody can take a portion of their monthly pay and put it in a savings account. But that’s after-tax money, meaning...
Price protection is an agreement between a buyer and a seller whereby the parties agree to fix the price of a good or service for a specific period of time. In practice, price protection (sometimes ...
The sum total of a mortgage payment is comprised of principal, interest, taxes, and insurance (PITI). The amount of principal paid, interest paid, property taxes, and homeowners insurance is broken d...
Purchase protection is an agreement between a customer and a seller whereby the two sides agree to set the price of a good or service in place for a particular time period. In reality, purchase prot...
Quick response (QR) code is a type of two-dimensional barcode that can be read with specific QR barcode readers and most mobile phone cameras. The code is made of small black squares and rectangles t...
A rain check is a written promise from a seller to a buyer. It guarantees that a buyer can purchase a product for a certain price at a later date, usually because the item is out of stock. Let's say...
The term remote deposit capture (RDC) refers to a technology that uses a smartphone to make online deposits to a user's bank account without having to physically visit a branch location. RDC is a se...
A restricted card list is a list of credit cards that are reported stolen, canceled or compromised in some way. A restricted card list is also called a "warning bulletin," "hot list" or "cancellatio...
A safe deposit box is a metal box, usually housed in a bank vault, that customers can rent in order to keep valuables, legal documents and other prized possessions in a secure location.   Obtainin...
Same-day funds can be deposited and then withdrawn on the same day. Let's say John Doe gets paid every other Friday. His employer automatically deposits his paycheck into his bank account on Friday ...
In economics, savings is the amount that is left after spending. In banking, savings refers to savings accounts, which are short-term, interest-bearing deposits with a bank or other financial institu...
A savings account is a low-risk, interest-bearing deposit with a bank or other financial institution. Technically, savings accounts are time deposits, meaning that a bank can require the account hol...
Savings clubs most commonly refer to a special type of account that provides a way to regularly save for a specific goal or event. These accounts historically came with a savings passbook with coupon...
Self-dealing is an illegal activity that occurs when a person or entity with fiduciary duty puts his or her own  interests ahead of a client's interests in a transaction. Let's say John Doe owns 50...
A signature-debit transaction, also known as an offline transaction, is a payment method that uses a debit card to transfer funds from a checking account to a merchant across a digital credit card ne...
Smartphone banking is the use of a smartphone or other cellular device to perform tasks such as monitoring account balances, transferring funds between accounts, bill payment and locating an ATM whil...
Spousal support is a series of payments to a separated or ex-spouse according to a divorce decree or separation agreement. Also known as "alimony," the idea behind spousal support is to provide a sp...
Take home pay is the portion of one's salary left after all payroll taxes have been deducted. John Doe has a salary of $100,000. He is paid 26 times per year (every other Friday). The federal and st...
The wealth effect is an increase in consumer spending directly proportional to strong stock portfolio performance. The wealth effect is a behavioral economic theory which posits that consumer spendi...
A tradeline is a record of activity for a credit account. A tradeline is created on your credit report when you borrow money from a bank or lender who then reports the activity of that account to one...
A person is unbanked when he or she does not participate in the banking system and relies on the use of cash rather than checks or credit cards. Let's assume John Doe is poor and does not trust bank...
A person is underbanked when he or she does not participate in the banking system very much and instead relies on the use of cash rather than checks or credit cards. In the securities world, underba...
Undue influence occurs when one party to a transaction is able to influence the decisions of another party to the transaction. Anybody who's ever had a pushy girlfriend or boyfriend knows what undue...
A vested interest is a right of ownership which is not dependent on something else. When a possession, ownership interest or the use of tangible property is present and unencumbered by any condition...
Vesting occurs when a financial instrument or account becomes wholly owned by an investor. For example, let's assume that John Doe receives options to buy 2,000 shares of Company XYZ, his employer, ...
A warning bulletin is a list of credit cards that are reported stolen, canceled or compromised in some way. A warning bulletin is also called a "hot list," "restricted card list" or "cancellation bu...
Commonly referred to as "The Oracle of Omaha" because of his Nebraska roots, Warren Buffett is widely regarded as the world's most prominent value investor. Buffett caught the investing bug at the U...
A weak sister is a security, economy or operating unit that performs worse than all the others. Let's say John Doe's portfolio contains five stocks: Company A, Company B, Company C, Company D and Co...
In the business world, wealth is a measure of financial resources. Wealth is usually a measure of net worth; that is, it is a measure of how much a person has in savings, investments, real estate an...
Wealth management is an investment advisory service for high net worth individuals. Wealth management combines both financial planning and specialized financial services, including personal retail b...
A wealth psychologist is a person who helps people cope with the emotional aspects of money. Let's say that John and Jane get married. John is a spender and Jane is a saver. Over the years, they fig...
A wire transfer is a method of transferring money electronically between two people or institutions. A wire transfer is made between two financial institutions by a person issuing instructions to on...
A withholding allowance reduces the amount of income tax an employer withholds from an employee's paycheck.  Withholding allowances are indicated by employees on the IRS Form W-4 and appropriate st...
A year-end bonus is extra money given to an employee, typically as a reward for helping the company achieve financial goals. Let's say Company XYZ's goal this year was to earn 5 cents per share. On ...
Yupcap stands for Young Urban Professionals Who Can't Afford Property. Let's say Jane Doe has a master's degree and is an editorial assistant in San Francisco. She makes $30,000 a year and thus does...
Yuppie is short for young urban professional. Yuppies are usually in their twenties or thirties, just out of college or graduate school, and have high-paying jobs in the city. They tend to lead affl...