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A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
- A -
Allowance - an amount of money parents give kids to help
them learn to manage money. The amount is usually given weekly. Sometimes an
allowance is tied to completing responsibilities — household chores or
jobs for the family.
Annual Percentage Rate (APR) - the rate of interest (in terms
of a percent, such as 8.75%) being charged for a loan over a year's time. The
APR rate includes interest, transaction fees, and service fees.
Appreciate - to grow in value. Usually a term used in relation
to investments: stocks, collectibles, etc., which are now worth more than you
paid for them.
Asset - any item of value that you own: house, land, gems,
stocks, bonds, money in savings, etc.
ATM - These letters stand for Automatic Teller Machine. This
is an electronic machine that enables people to take care of Credit Union
business 24 hours a day, 7 days a week. You can deposit and withdraw money,
pay loans, etc., at most ATMs.
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- B -
Balance - 1) In talking about loans, the balance
is the difference between the amount owed and the amount paid. If you pay $45
on a $100 debt, your balance is $55. 2) In talking about checkbooks,
balancing means to account for all money that came into and went out of your
account, so that at the end of the month you and your Credit Union statement agree. 3)
In talking about savings, your balance is what is left in your savings
account after you deposit or withdraw money.
Bankruptcy - a state of being in so much debt that you are
legally declared unable to pay in full the people and companies you owe. When
you legally declare yourself bankrupt in some states, you must sell off all
your possessions and pay off your debts as best you can.
Blue Chip Stock - a name given to the stocks of major corporations,
like IBM and General Motors. The name is derived from the most highly valued
poker chip, the blue chip.
Bond - an IOU issued by a corporation or government that
confirms you are lending the corporation or government money. Bonds pay interest
regularly to lenders. At the end of the term of the bond, the borrower returns
to the lender the face value of the bond (the amount the lender invested in
the bond).
Broker - a licensed professional who advises people about
investments; also helps people buy and sell stocks, bonds, mutual funds, etc.
The broker earns a fee for this help, called a commission, usually a percentage
of the transaction.
Budget - a plan you create for controlling spending and encouraging
saving.
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- C -
Certificate of Deposit - a type of investment that requires
you to invest money for a certain length of time and guarantees the same rate
of return (interest) for that entire time. CDs usually require a minimum deposit.
Charge - to borrow money (from a store, service provider,
or credit card company) to make a purchase. If you do not pay the debt off
in full within the card issuer's grace period (usually 25-28 days), you will
pay interest on the amount you owe.
Check register - (sometimes called a check ledger). This
booklet is usually kept in your checkbook, and you use it to keep track of
all the deposits, withdrawals, and checks you write. After you write each in
your register, you subtract or add the amount to your checking account balance.
If you keep your register up-to-date, you will always know how much money you
have in your checking account.
Collectibles - objects such as art, jewelry, baseball cards,
and antiques that people buy in the hope that the objects' value will increase.
Commodities - raw materials — such as oil, wheat, soybeans,
pork, or gold -you buy. In buying commodities you are hoping that the price
will rise, so that you can sell the commodity for a profit.
Compound Interest - interest on an investment, like a savings
account, that is calculated not only on the money you originally invested,
but also on any interest the investment has already earned.
Corporation - the most common form of organizing a business — the
organization's total worth is divided into shares of stock, and each share
represents a unit of ownership and is sold to stock holders. A corporation
is considered a separate entity from the stockholders for legal and tax purposes.
Examples of corporations: Pepsi Cola, Intel, The Gap.
Credit - a loan that enables people to buy something now
and to pay for it in the future.
Credit Limit - the highest amount you may charge on a credit
card. Your limit is set by your card company's opinion of your ability to handle
debt.
Credit History - a record of your borrowing and paying habits.
Credit reporting companies track your history and supply this information to
credit card companies, credit unions, and other lenders.
Credit Rating - Credit agencies are companies that keep track
of how you pay your debts (bills). Do you pay on time? Do you make the required
payments? When you want to borrow money from a Credit Union or apply for a credit card,
the Credit Union or the credit card company will ask a credit agency to rate you. Lenders
want to know if you are a reliable bill payer before they approve your loan
or credit card.
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- D -
Debit Card - This plastic card looks like a credit card,
but it is used to withdraw money from a savings or checking account. When you
use a debit card at Automatic Teller Machines or in stores to make purchases,
money is immediately withdrawn from your account. You cannot withdraw more
money than you have in the account.
Debt - money or goods you owe.
Deposit - to put money into a Credit Union or investment account.
Diversify - to spread out the money you invest into different
types of investments: bonds, stocks, CDs, mutual funds, etc. The idea is to
avoid putting all your eggs in one basket. Different kinds of investments do
well in different kinds of economic climates. Therefore, if one of your investments
drops in value, the other kinds of investments should hold or increase their
value.
Dividend - a payment made by a company to a stockholder to
share in the company's profits.
Discount - to reduce from an original price or an item's
full worth.
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- E -
Earned Income - wages paid in exchange for work.
Entrepreneur - a person who assumes the risk to start a business
with the idea of making a profit.
Expenses - things you pay money for - both needs and wants.
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- F -
Finance Charge - the fee you pay when you do not pay off
the entire credit card debt within a single payment period, usually about 25-28
days.
Fixed - not changing. Fixed interest rates never
change during the time of the investment or loan.
Fixed Expenses - expenses which stay basically the same from
month to month, such as housing and transportation.
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- G -
Grace Period - the time, usually about 25-28 days, which
you have to pay a bill or a loan in full. If you pay within the grace period,
you do not have to pay a finance charge.
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- H -
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- I -
Income Tax - money that wage earners pay the government to
run the country. The amount of the tax depends upon how much you earn.
Insufficient Funds - a phrase that means you did not have
enough money to cover an expense. Usually checks that bounce are returned stamped
with the phrase, "insufficient funds." The amount of the check was
larger than the balance in the checking account.
Insure - to protect yourself from loss. You pay premiums
(payments) to an insurance company who, in turn, agrees to pay for losses to
your property (house, car, jewelry, etc.) or your person (in case of injury).
You can buy insurance that protects you even when you cause a loss to other
people. For example, you cause a car accident.
Insured Savings - accounts that are insured up to $100,000
by NCUA. Credit Union are insured by NCUA or another insurance company, so your money in Credit Union accounts is insured.
Interest - the amount paid by a borrower to a lender for
the privilege of borrowing the money.
Interest Rate - the price paid for the use of someone else's
money expressed as an annual percentage rate, such as 6.5%.
Invest - to put your money into CDs, money market accounts,
mutual funds, savings accounts, bonds, stocks or objects that you hope will
grow in value and earn you more money.
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- J -
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- K -
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- L -
Lien - a right given to a lender over a borrower's property
or money when the borrower cannot pay a debt.
Liquidity - - how quickly an asset (any item of value that
you own) can be turned into cash. In other words, you don't have to wait until
a certain date or pay a penalty to withdraw your money.
Loan - money or an object that is lent, usually with the
understanding that the loan will be paid back, usually with interest.
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- M -
Minimum Payment - the smallest amount you are required to
pay a lender each month on a debt.
Money Market Account - a savings account offered by a Credit Union
(or a mutual fund). The account typically requires 1) a minimum deposit and
2) that you maintain a minimum balance. The account invests in certificates
of deposit and treasury bills and pays a rate of interest that rises and falls
with the economy.
Mutual Fund - a savings fund that uses cash from a pool of
savers to buy a wide range of securities, like stocks, bonds, and real estate.
This is a way to diversify your investments because you own small units of
each of the fund's investments. The fund is managed by professionals and permits
small amounts of money to be invested.
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- N -
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- O -
Opportunity Cost - the next best alternative that is given
up when a choice is made.
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- P -
Penny Stock - a nickname for extremely low priced stock,
usually only a few dollars a share. These stocks are considered highly speculative,
which is another way of saying highly risky. They are priced low because they
have not yet proven themselves in the market.
Percentage - a way of measuring. The number 100 (which stands
for the whole amount) is usually divided into 100 smaller, but equal, parts,
each called a percent. So a percentage usually refers to a certain number of
parts within the whole. Therefore, 6% is 6 units out of 100% (the whole). If
you have invested $100, and you earn 8% interest on the money, you will earn
8 parts of the whole, or $8. A percentage explains a number in relation to
the whole.
Profit - the money you've earned after you subtract a) any
money you had to spend to make the product or perform the service. B) any taxes
that had to be paid on your earnings.
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- Q -
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- R -
Rate of Compounding - When an account compounds interest
(figuring interest on interest already earned) it does so regularly. Compounding
can take place annually, semi-annually, quarterly, monthly, or daily. The more
often interest is compounded the faster your money will grow.
Real Estate - property in the form of land or buildings.
Return - the amount of money a saver receives from a savings
account or fund. The return is usually talked about as a percentage, such as "This
account returns 7.37%."
Risk - the likelihood that you will lose money on an investment.
Rule of 72 - math formula that determines the number of years
needed to double your money at a given interest rate. Here's how it works:
you divide 72 by the interest rate. Therefore, money invested at 10% interest
rate will double in 7.2 years.
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- S -
Save - hanging onto your money for a future use instead of
spending it. Saving is the opposite of spending.
Savings Account - a Credit Union account that pays you interest for
keeping your savings in it. Credit Unions use your money to make loans, so they pay
you interest for the use of your money. Your savings is insured up to $100,000
by the FDIC, so you don't have to worry about borrowers taking your money and
not paying it back.
Scarcity - a lack of something, like money, natural resources,
etc. Scarcity forces you to make choices about how you use or treat whatever
is scarce.
Share - a unit of ownership in an investment or a company.
Shareholder - someone who owns stock in a company.
Social Security Tax - a tax used to fund a program of the
US government that gives money to elderly people. The elderly receive funds
because the federal government has deducted money from each of their paychecks
during the course of their working lives. The money taken out of their paychecks
has been deposited into the Social Security fund. Employers, too, deposited
money to this fund on behalf of each employee. When people reach a certain
age, they become eligible to receive Social Security payments. The government
mails checks each month. These payments help the elderly live, now that they
are no longer working full-time. The money they receive is drawn out of the
Social Security fund, where it has been earning interest for many years.
Sole Proprietor - a business owned by a single person.
Splitting - to divide stock in order to lower its price so
that more people will invest in it. In a two-to-one split, 100 shares of $70
per-share stock become 200 shares of $35 per-share stock. In a three-to-one
split, 90 shares at $60 a share become 270 shares at $30 a share.
Standard of Living - the level of material well-being of
an individual or group.
Stock - a certificate representing a share of ownership in
a company.
Stock Market - an organized way for 1) people to buy and
sell stocks and 2) corporations to raise money. There are three widely known
stock exchanges: The New York Stock Exchange, the American Stock Exchange,
and the National Association of Securities Dealers Automated Quotation System
(you hear it called NASDAQ on the news).
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- T -
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- U -
Unearned Income - money you make that is not the result of
your labor, such as interest from a savings account or other kind of investment.
U.S. Bond - a kind of investment in which you lend money
to the government for a certain amount of time and at a certain interest rate.
You are paid interest according to the terms of your bond. At the end of the
agreed-on time, the borrower (the government) returns to you the amount you
originally lent.
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- V -
Variable Expenses - kinds of spending that can be controlled
and typically change from month to month. For example, groceries can be a variable
expense. You can choose to buy expensive food, (steak, lobster, lamb chops,
or shrimp) or inexpensive food (chicken legs, turkey, hamburger). With variable
expenses, you have choices.
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- W -
Withdraw - to take money out of an account.
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- X -
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- Y -
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- Z -
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