Glossary

Kid-friendly definitions for money words. Terms in lessons link here automatically.

67 terms

1099
A tax form reporting income paid to independent contractors and freelancers — usually with no tax withheld.
Example: Jordan earns $2,000 from freelance design and receives a 1099-NEC at year-end.
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Allowance
Money parents or guardians give regularly, often tied to chores or agreed rules.
Example: You get $15 every Friday as allowance.
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APY
Annual Percentage Yield — the real rate you earn on savings in a year, including compound interest.
Example: A savings account with 4% APY grows a little faster than one quoted at 4% simple interest.
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Balance sheet
A snapshot of what a company owns (assets), owes (liabilities), and shareholders' equity on a specific date.
Example: Cash and buildings are assets; loans and bills owed are liabilities.
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Barter
Trading goods or services directly without using money.
Example: Swapping tutoring for a bike repair.
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Behavioral finance
The study of how psychology and biases affect financial decisions.
Example: Selling in panic after a headline even though your long-term plan didn't change.
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Bond
A loan you make to a government or company. They pay interest and return your money when the bond matures.
Example: You buy a $100 bond and receive $4 interest each year until it matures.
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Budget
A plan for your money — how much to save, spend, and give before you use it.
Example: You budget $8 for saving and $8 for spending each week.
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Buy now, pay later
A way to split a purchase into smaller payments over time. Missing a payment can mean fees.
Example: You pay $10 now and $10 later for a $20 hoodie.
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CD
Certificate of Deposit — savings you leave in the bank for a set time to earn higher interest.
Example: You put $200 in a 1-year CD and earn extra interest.
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CFP
Certified Financial Planner — a credential for advisors who help people plan saving, investing, and life goals.
Example: A CFP helps a family plan for college and retirement.
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Charitable giving
Donating money, goods, or time to help people, causes, or organizations you care about.
Example: Jordan donates $10 each month to a local food bank.
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Checking account
A bank account for everyday spending, often with a debit card.
Example: You use checking to pay for lunch with your debit card.
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Compound interest
Earning interest on your interest over time, so savings can grow faster the longer you wait.
Example: Year 1 you earn $5; year 2 you earn interest on the new total.
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CPA
Certified Public Accountant — a licensed accountant who passed extra exams and meets experience requirements.
Example: A CPA helps a business file taxes and audit its books.
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Credit
Borrowing money you must pay back, often with extra cost called interest.
Example: Using a payment plan to buy something before you've saved the full amount.
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Credit score
A number (300–850) that shows lenders how reliably you repay borrowed money. Higher scores often mean better loan terms.
Example: Paying your phone bill on time every month helps build a good credit score over time.
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Credit utilization
The percentage of your credit card limit you're currently using. Lower utilization often helps your credit score.
Example: If your limit is $500 and your balance is $100, your utilization is 20%.
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Cryptocurrency
Digital money that can change in value quickly. Often risky and hyped.
Example: Bitcoin is a well-known cryptocurrency.
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Debit card
A card that spends money directly from your bank account.
Example: You tap your debit card and $12 comes out of checking.
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Diversification
Spreading money across many investments so one bad result doesn't hurt everything.
Example: An index fund owns pieces of hundreds of companies at once.
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Dividend
Cash some companies pay to shareholders from their profits.
Example: You own 10 shares and receive $2 per share as a dividend.
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Dollar-cost averaging
Investing a fixed amount on a regular schedule regardless of market prices.
Example: Investing $25 every month into an index fund.
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Emergency fund
Money set aside for unexpected expenses — not for wants or planned goals.
Example: You keep $75 in a separate jar for a cracked phone screen or lost bus pass.
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Entrepreneurship
Starting and running your own business to earn money.
Example: You run a dog-walking service in your neighborhood.
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ETF
Exchange-traded fund — a basket of investments that trades on a stock exchange like a single stock.
Example: An S&P 500 ETF owns pieces of 500 large U.S. companies in one purchase.
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FDIC
Federal Deposit Insurance Corporation — protects bank deposits up to $250,000 per account type if a bank fails.
Example: Your $500 in an FDIC-insured savings account is protected.
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Fintech
Financial technology — apps and systems that handle money digitally, like mobile banking and payment apps.
Example: A round-up savings app that moves spare change into savings is fintech.
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FOMO
Fear Of Missing Out — pressure to buy because others have something or a sale "ends soon."
Example: An ad says "only 2 left" so you rush to buy.
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Futures contract
An agreement to buy or sell an asset at a set price on a future date; both sides are typically obligated unless the position is closed early.
Example: A bakery might use wheat futures to lock in flour costs before harvest season.
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GDP
Gross Domestic Product — the total value of goods and services a country produces; a key measure of economic size and growth.
Example: If GDP shrinks for two quarters, many call it a recession signal.
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Gross pay
Your total earnings before taxes and other deductions are taken out.
Example: Your paycheck says $600 gross for the month.
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Growth stock
Stock of a company expected to grow earnings faster than average; often reinvests profits.
Example: Fast-expanding tech firms are often labeled growth stocks.
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Hedge fund
A private investment fund using flexible strategies for wealthy or institutional investors, often with high fees and lock-up periods.
Example: A pension fund might allocate a small slice to hedge funds seeking returns different from the stock market.
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Identity theft
When someone steals your personal information and pretends to be you to get money or open accounts.
Example: A scammer uses your name and Social Security number to open a credit card in your name.
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Income statement
A financial report showing revenue, expenses, and profit or loss over a period.
Example: A company reports $10M revenue and $1M profit for the year on its income statement.
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Index fund
A basket of many stocks that tracks a market list, like the S&P 500.
Example: One fund gives you a tiny piece of 500 big companies.
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Inflation
When prices rise over time, so the same amount of money buys a little less.
Example: A candy bar that cost 50 cents years ago might cost $2 today.
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Insurance
Protection you pay for (a premium) that helps cover big unexpected costs.
Example: Car insurance helps pay for repairs after an accident.
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Interest
Extra money — either what a bank pays you for saving, or what you pay for borrowing.
Example: You earn 5% interest on $100 and have $105 after a year.
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Margin call
When a broker demands more cash or forces sales because your leveraged account fell below required levels.
Example: Your stocks dropped and the broker calls saying deposit $500 by tomorrow or they'll sell your shares.
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Mutual fund
A pooled investment that buys a portfolio of stocks, bonds, or both; priced once daily at NAV.
Example: Many retirement accounts invest in mutual funds.
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Needs vs wants
Needs are must-haves for life and safety; wants are extras you could live without.
Example: Food is a need; the latest video game is usually a want.
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Negotiation
Talking respectfully to reach a fair agreement on price, pay, hours, or terms.
Example: You ask a neighbor, "Would you consider $13 an hour?" and they agree on babysitting pay.
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Net pay
Take-home pay after taxes and deductions — what actually lands in your account.
Example: Gross is $600 but net deposit is $540.
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Opportunity cost
What you give up when you choose one option instead of another.
Example: If you spend $15 on a game, you can't use that $15 for your concert goal.
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Overdraft
When you spend more than you have in checking. The bank may cover it but charge a fee.
Example: You have $8 but swipe for $12 — overdraft can cost $30+ in fees.
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P/E ratio
Price-to-earnings ratio — stock price divided by earnings per share; one valuation clue.
Example: A P/E of 20 means investors pay $20 for each $1 of yearly earnings.
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Phishing
Fake messages or links designed to steal passwords or money.
Example: A text says "click here to unlock your account" but it's a scam.
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Portfolio
Your collection of investments — stocks, funds, property, or other assets you own.
Example: An investor's portfolio might include two rental properties and an index fund.
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Predatory lending
Unfair loans with high fees, confusing terms, or traps that keep borrowers in debt.
Example: A payday loan charging $45 to borrow $300 for two weeks is often predatory.
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Premium
The regular amount you pay for insurance coverage.
Example: You pay a car insurance premium every month.
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Private equity
Investment in private companies or take-private deals, often using debt to improve and later sell the business.
Example: A PE firm buys a regional restaurant chain, updates operations, and sells it five years later.
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Profit
Money left after paying all costs of a business or job.
Example: You earn $80 mowing lawns and spend $20 on gas — profit is $60.
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Risk
The chance you could lose money on an investment or decision.
Example: Stock prices can go down as well as up.
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Sales tax
Extra money added to many purchases, set by your city or state.
Example: A $10 shirt might cost $10.80 after tax.
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Savings account
A bank account meant for money you want to keep safe and grow a little with interest.
Example: You put birthday money in savings for a bike goal.
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Security deposit
Money a landlord holds when you move in, often one month's rent, returned if you leave the place in good shape.
Example: You pay a $900 deposit plus first month's rent before getting your apartment keys.
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Shareholder
Someone who owns shares of a company's stock — a part-owner of that business.
Example: If you own 10 shares, you are a shareholder of that company.
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Stock
A small piece of ownership in a company. Also called a share.
Example: Buying 10 shares means you own a tiny part of that company.
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Student loan
Money borrowed to pay for college that you repay later, usually with interest.
Example: You borrow $20,000 for school and repay $250 per month after graduation.
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Subscription
A recurring charge until you cancel — monthly or yearly.
Example: A $5/month music app costs $60 per year.
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Taxes
Money paid to the government to fund services like schools and roads.
Example: Part of your paycheck goes to income tax.
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Unit price
Cost per single item or per ounce — helps compare different package sizes.
Example: A big bag might cost less per snack than small bags.
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Value stock
Stock that may trade below what investors estimate it's worth based on earnings or assets.
Example: Mature companies with steady dividends are often called value stocks.
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Venture capital
Funding for early-stage startups in exchange for ownership, expecting many failures and a few big wins.
Example: A VC fund invests in a two-person app startup before it has profit.
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