From managing a budget to understanding different payment card types and more, there are several common financial terms individuals may encounter in everyday life. Get started with these finance terms and definitions to know.
This article includes tips, suggestions and general information. We recommend that you always do your own research and consider getting independent tax, financial and legal advice before making any important decision.
A budget is a personalised financial plan that may help someone manage their money effectively. It can serve as a tool for tracking income, expenses, and savings goals.
A savings account allows individuals to deposit money they don’t intend to spend in the near future in banks or building societies. In return, the account typically earns interest, helping the deposited funds grow over time.
A credit card is a payment card generally issued by a financial institution that allows individuals to borrow money up to a predetermined credit limit for making purchases. Cardholders must make a minimum monthly payment and the outstanding balance attracts interest.
A debit card is a payment card linked to an individual's bank account. When used for purchases or cash withdrawals, it deducts funds directly from the individual’s account.
A pension is a way to save money during someone’s working years to provide income in retirement. It is typically funded through a combination of personal contributions, employer contributions, and in some instances government contributions.
Insurance is a financial tool where individuals can pay premiums to an insurance company in exchange for coverage against specific risks or losses.
Inflation refers to a gradual increase in the general price level of goods and services over time. It means that, on average, things may become more expensive, and the same amount of money may buy less than it used to.
Net worth is a financial metric that represents the difference between a person's assets (what they own, like cash, investments, and property) and their liabilities (what they owe, such as debts and loans).
A cashpoint is another term for an ATM (automated teller machine) and is a self-service banking machine that can allow individuals to perform basic financial transactions. People can typically withdraw cash, check account balances, deposit money, and sometimes conduct other banking tasks.
A financial goal is a specific and measurable personal goal related to a person’s finances. Examples include saving for a holiday, paying off debt, or building an emergency fund.
Mobile banking refers to the use of a smartphone or other mobile devices to perform various financial transactions and banking activities, such as checking account balances, transferring funds, paying bills, and depositing cheques.
Buy now, pay later (BNPL) is a form of credit that allows individuals to make purchases and defer payment for those purchases to a later date, often with interest-free instalment options.
A credit report is compiled by a Credit Reference Agency and provides a comprehensive record of an individual's financial history and creditworthiness. It typically includes information about credit accounts, payment history, and outstanding debts and may be used by lenders to assess the risk of lending money to that individual.
A loan is when a lender provides a specified amount of money to a borrower, who agrees to repay the lender on agreed dates, typically with interest and predetermined terms and conditions. Loans may be used for various purposes, including personal loans, mortgages, and business loans.
Whether budgeting income or saving for a home, investing, or putting money away for retirement, understanding these common financial terms can be key to making informed decisions that impact daily life.
Build onto the foundation of basic financial terms with tips on personal budgeting and maintaining an emergency fund.
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