Glossary
Every money term, in plain English.
A definition per term, plus a one-paragraph explanation of when it matters. Numbers and rules are US-focused and current as of the last review. Cross-linked to the lessons where each concept shows up.
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- 401(k)RetirementAn employer-sponsored retirement account with pre-tax (traditional) or after-tax (Roth) contributions.
- 403(b)RetirementThe 401(k) analog for public-school, nonprofit, and some healthcare workers.
- 457(b)RetirementA deferred-compensation retirement plan for state, local, and some nonprofit employees.
- 529 planRetirementState-sponsored tax-advantaged account for education expenses, K-12 or college.
A
- AGI (Adjusted Gross Income)TaxesTotal income minus specific adjustments — the gateway number to most deductions and credits.
- AmortizationLoans & CreditThe schedule by which a fixed loan payment gets split between interest and principal over time.
- AnchoringBehavioralOver-weighting a specific number as a reference point when making decisions.
- APR (Annual Percentage Rate)Loans & CreditThe yearly cost of borrowing, expressed as a percentage, including most fees.
- APY (Annual Percentage Yield)Loans & CreditThe yearly return on savings, including the effect of compounding.
- ARM (Adjustable-Rate Mortgage)Loans & CreditA mortgage with an initial fixed period, then a rate that adjusts periodically.
- Asset allocationInvestingHow your portfolio splits between stocks, bonds, cash, and other asset classes.
- AUM feeInvestingA percentage-of-assets fee an advisor charges — typically 1% per year.
- Auto loanLoans & CreditAn installment loan used to purchase a car, secured by the vehicle.
B
- Backdoor RothRetirementA workaround that lets high-income earners fund a Roth IRA via a non-deductible Traditional IRA conversion.
- BondInvestingA loan you make to a company or government that pays fixed interest until it matures.
- Brokerage accountInvestingA taxable investment account for buying stocks, bonds, ETFs, and mutual funds.
- BudgetPersonal FinanceA plan for how you allocate income to spending, saving, and debt payoff each month.
- Buy Now, Pay Later (BNPL)Loans & CreditShort-term installment financing at checkout — typically four payments over six weeks.
C
- Capital gainTaxesProfit from selling an investment for more than you paid.
- Capitalized interestLoans & CreditUnpaid interest added to your loan principal — interest now earning interest.
- Closing costsLoans & CreditThe fees paid at the end of a real-estate transaction — typically 2–5% of the loan.
- CoinsuranceInsuranceThe percentage of covered care you pay after meeting your deductible — often 20%.
- Compound interestPersonal FinanceInterest earned on both your original money and on prior interest.
- Confirmation biasBehavioralThe tendency to notice and remember information that confirms what you already believe.
- CopayInsuranceA fixed dollar amount you pay for a covered service — usually collected at the visit.
- Cost basisInvestingWhat you originally paid for a security, used to calculate capital gains at sale.
- CPI (Consumer Price Index)Personal FinanceThe most commonly cited measure of inflation, tracked by the Bureau of Labor Statistics.
- Credit limitLoans & CreditThe maximum you can charge on a credit card without going over-limit.
- Credit reportLoans & CreditThe detailed record of your credit accounts and payment history that scoring models read.
- Credit scoreLoans & CreditA three-digit number lenders use to estimate how likely you are to repay a loan.
- Credit utilizationLoans & CreditThe percentage of your available credit card limit you're using at any moment.
- CTC (Child Tax Credit)TaxesA credit up to $2,000 per qualifying child under 17, partially refundable.
D
- Debt in collectionsLoans & CreditA delinquent debt that the original creditor has sold or assigned to a collection agency.
- DeductibleInsuranceThe amount you pay for covered care before insurance starts paying.
- Disability insuranceInsuranceInsurance that replaces part of your income if you can't work because of illness or injury.
- DiversificationInvestingSpreading investments across assets so no single loss can sink the whole portfolio.
- DividendInvestingA cash distribution a company or fund pays to shareholders from earnings.
- Dollar-cost averagingInvestingInvesting a fixed dollar amount at regular intervals, regardless of price.
- DTI (Debt-to-Income ratio)Loans & CreditTotal monthly debt payments divided by gross monthly income — the key mortgage underwriting number.
- DurationInvestingA bond's sensitivity to interest-rate changes — roughly how many years to get your money back.
E
- Effective tax rateTaxesTotal tax divided by total income — always lower than marginal rate in a progressive system.
- EITC (Earned Income Tax Credit)TaxesA refundable credit for low- and moderate-income workers, worth up to about $8,000.
- Emergency fundPersonal FinanceCash reserved for unexpected expenses so a bad month doesn't become bad debt.
- Employer matchRetirementThe portion of your 401(k) contribution that your employer adds on top.
- ETF (Exchange-Traded Fund)InvestingA fund whose shares trade on an exchange like a stock, usually tracking an index.
- Expense ratioInvestingThe annual percentage a fund charges you to hold it — subtracted invisibly from returns.
F
- FAFSALoans & CreditThe Free Application for Federal Student Aid — the form to unlock federal grants and loans.
- FDIC insurancePersonal FinanceFederal insurance that protects up to $250,000 per depositor per bank per ownership category.
- FiduciaryInvestingA financial professional legally required to act in your best interest.
- Fixed-rate loanLoans & CreditA loan whose interest rate does not change over the life of the loan.
- FOMO (Fear of Missing Out)BehavioralThe pull to buy an asset because everyone else seems to be making money on it.
- Form 1040TaxesThe main US individual income tax return.
- Form 1099TaxesA family of IRS forms reporting non-employment income (contracting, interest, dividends, brokerage).
- Form 1099-DIVTaxesThe IRS form reporting dividends and capital gain distributions from funds.
- Form 1099-INTTaxesThe IRS form reporting interest income of $10 or more from a bank or brokerage.
- Form 8606TaxesReports non-deductible IRA contributions and Backdoor Roth conversions.
- Form W-2TaxesThe wage and tax statement your employer sends you and the IRS in January.
H
- Hard inquiryLoans & CreditA credit check tied to a loan or credit application that can slightly lower your score.
- HDHP (High Deductible Health Plan)InsuranceA health plan with a high deductible (minimum $1,650 single in 2025) that lets you contribute to an HSA.
- HELOC (Home Equity Line of Credit)Loans & CreditA revolving credit line secured by your home, usually with a variable rate.
- Home equity loanLoans & CreditA fixed-rate lump-sum loan secured by your home equity.
- HSA (Health Savings Account)RetirementTriple-tax-advantaged account for medical expenses — deductible in, tax-free growth, tax-free out for medical.
- HYSA (High-Yield Savings Account)Personal FinanceA savings account offering interest rates well above the national average.
I
- Income-Based Repayment (IBR)Loans & CreditA federal student-loan plan that caps your payment at a percentage of discretionary income.
- Index fundInvestingA fund that mechanically holds every stock (or bond) in an index — no manager stock-picking.
- InflationPersonal FinanceThe general rise in prices over time, which erodes the purchasing power of cash.
- Interest rateLoans & CreditThe percentage a lender charges for the money it lends, before fees.
- Itemized deductionTaxesIndividual deductions listed on Schedule A instead of taking the standard deduction.
L
M
- MAGI (Modified Adjusted Gross Income)TaxesAGI plus certain add-backs — used to determine eligibility for many tax benefits.
- Marginal tax rateTaxesThe rate on your NEXT dollar of income — not on your whole income.
- Money market fundInvestingA mutual fund that holds very short-term high-quality debt, targeting a stable $1 share price.
- Mutual fundInvestingA pooled investment fund priced once daily at market close.
N
O
P
- Payday loanLoans & CreditA small, short-term loan meant to be repaid on your next paycheck — with triple-digit effective APRs.
- PITILoans & CreditPrincipal, Interest, Taxes, and Insurance — the four components of a monthly mortgage payment.
- PMI (Private Mortgage Insurance)Loans & CreditInsurance that protects the LENDER when you put down less than 20%.
- Points (discount points)Loans & CreditPrepaid interest that lowers your mortgage rate — one point equals 1% of the loan amount.
- PremiumInsuranceThe monthly amount you pay for insurance coverage, regardless of whether you use care.
- PrincipalLoans & CreditThe amount you originally borrowed, or the remaining balance you still owe.
- Priority waterfallPersonal FinanceThe order in which each dollar of income should flow — match, high-interest debt, HSA, IRA, 401(k), taxable.
- Pro-rata ruleRetirementThe IRS rule that makes Backdoor Roth conversions partly taxable if you have pre-tax IRA balances.
- PSLF (Public Service Loan Forgiveness)Loans & CreditFederal program that forgives remaining Direct Loan balance after 120 qualifying payments in public service.
Q
R
- RebalancingInvestingSelling assets that have grown and buying ones that have lagged, to return to target allocation.
- RefinanceLoans & CreditReplacing your existing mortgage with a new loan, usually to lower the rate or change the term.
- Reg BI (Regulation Best Interest)InvestingThe SEC standard that requires broker-dealers to act in the customer's best interest at recommendation time.
- RMD (Required Minimum Distribution)RetirementThe minimum you must withdraw from pre-tax retirement accounts starting at age 73.
- Robo-advisorInvestingA digital platform that builds and manages a diversified portfolio for you, for a small annual fee.
- Roth 401(k)RetirementThe Roth version of a 401(k) — contribute after-tax, withdraw tax-free in retirement.
- Roth IRARetirementAn IRA with after-tax contributions, tax-free growth, and tax-free withdrawals in retirement.
S
- SALT capTaxesThe $10,000 limit on state and local tax deductions (including property and income taxes).
- Schedule ATaxesThe form for itemizing deductions on your 1040.
- Schedule CTaxesThe form for reporting self-employment income and expenses.
- Schedule J (Income Averaging)TaxesLets farmers and fishermen average current-year income against the prior three years' brackets.
- SE tax (Self-Employment tax)TaxesSocial Security and Medicare tax paid by the self-employed — 15.3% up to the wage base.
- SEP-IRARetirementA retirement account for self-employed people and small-business owners, with high contribution limits.
- Soft inquiryLoans & CreditA credit check that does NOT affect your score — for pre-qualification or self-checks.
- Solo 401(k)RetirementA one-participant 401(k) for self-employed people with no other employees.
- Standard deductionTaxesA flat amount you can subtract from taxable income without itemizing.
- Statute of limitations (SOL) on debtLoans & CreditThe number of years after which a creditor can no longer sue to collect an unpaid debt.
- StockInvestingA share of ownership in a corporation.
- Student loanLoans & CreditA loan used to pay for higher education, from the federal government or a private lender.
- Subsidized loan (student)Loans & CreditA federal student loan where the government pays interest while you're in school.
- Sunk cost fallacyBehavioralContinuing something because of what you've already invested, even when quitting is better forward.
T
- Tax creditTaxesA dollar-for-dollar reduction of your tax owed — much more valuable than a deduction.
- Tax deductionTaxesA reduction in taxable income — worth your marginal rate times the deduction amount.
- Tax-loss harvestingInvestingSelling investments at a loss to offset capital gains and up to $3,000 of ordinary income.
- Term life insuranceInsuranceLife insurance that pays a death benefit if you die during a fixed term (10, 20, or 30 years).
- Time value of moneyPersonal FinanceA dollar today is worth more than a dollar tomorrow, because of what it could earn in between.
- TIPS (Treasury Inflation-Protected Securities)InvestingUS Treasury bonds whose principal adjusts with CPI, offering guaranteed real returns.
- Traditional IRARetirementAn individual retirement account with pre-tax contributions (deductible up to income limits).
- TSP (Thrift Savings Plan)RetirementThe federal government and military 401(k), with among the lowest expense ratios in the industry.
U
V
W
- Wage garnishmentLoans & CreditA court order that requires an employer to withhold part of your paycheck to pay a debt.
- Wash sale ruleTaxesA tax rule that disallows a loss if you buy the same or substantially identical security within 30 days.
- Whole life insuranceInsurancePermanent life insurance that builds cash value — expensive, usually not the right choice.
- WithholdingTaxesFederal (and often state) income tax your employer takes from each paycheck and sends to the IRS.
Y
Showing 125 of 125 terms — more added as lessons expand.