Financial Literacy and Personal Finance Vocabulary List

401(k)

A retirement savings account that some employers offer to help their employees save money for retirement, in which employees can contribute a portion of their paycheck.

Assets

Items that you own that have value, such as a house, car, stocks, bonds, or the amount of money that you have in the bank.

Automated Teller Machine (ATM)

A bank-owned machine that allows you to withdraw cash, check your account balance, and deposit money or checks.

Bank

A financial institution that keeps your money safe and can provide services like checking accounts, savings accounts, and deposit money or checks.

Bankruptcy

A legal process with serious consequences in which a person or business declares that they are unable to pay their debts and starts fresh financially.

Bonds

A type of investment in which you lend money to a company or government in exchange for regular interest payments and the return of your principal investment after a specific amount of time.

Borrower

An individual or organization that receives money from a lender with the expectation of paying the money back with interest.

Budget

A plan for saving and spending money.

Check

A written document directing your bank to pay a specific amount of money from your checking account to another person or business.

Checking Account

An account with a bank or credit union that allows you to deposit and withdraw money.

Comparison Shopping

The process of looking at the price, advantages, and disadvantages of two or more similar products before making a purchase to find the best deal and save money.

Compound Interest

The amount of money you earn on both the principal and previously earned interest, which allows your money to grow faster over time.

Emergency Fund

An amount of money that is saved and set aside to use only during unexpected events such as the loss of a job, expensive medical bills, and property damage.

Expenses

The amount of money spent on the purchase of goods and services.

Fee

An additional charge that you have to pay to receive a good or service.

Fixed Expenses

Bills that you have to pay regularly and change little over time, such as rent, car payments, and insurance.

Fraud

The illegal act of using lies and tricks to steal other people's personal and financial information.

Gratuity

A percentage of the total bill for a service that is directly paid to a hospitality workers, such as waiters and hairdressers, to show your appreciation for good service.

Gross Income

The total amount of money earned from your salary, wages, and other earnings before taxes and deductions.

Identity Theft

The use of your name, Social Security number, credit card number, or other personal information without your knowledge or permission.

Impulse Purchase

Buying a good or service without thinking about its impact on your life or finances.

Income

The total amount of money you earn from your job and other sources.

Income Tax

A percentage of your total earnings that is paid to the federal, state, and local governments so they can fund government programs and public services.

Inflation

The gradual increase of prices for goods and services over time that decreases the value of money.

Insurance

A service provided by a company or government agency that offers financial support for specific types of medical bills, property damages, or other unexpected costs in exchange for a monthly or yearly premium,

Interest

The amount of money that a borrower must pay a lender in addition to reimbursing the original loan.