- By Ridam Sharma
- Sat, 25 Oct 2025 05:52 PM (IST)
- Source:JND
Important Finance Terms: Being aware of the basic personal finance terms is important to making smart financial decisions. You will be able to manage your income and expenses more efficiently. Additionally, you will know how to save money, make investments, and set financial goals for the future. Most new earners are prone to financial blunders; however, being aware of the basics will also help you from those scams. Putting efforts into being financially independent will also help you form habits in savings, budgeting, and responsible use of credit, which will build a lifestyle of financial well-being. Understanding how investments, loans, and interest operate makes it easier to grow your wealth and pay off debt efficiently.
List Of 30+ Personal Finance Terms:
1. Asset: Anything valuable that you own.
2. Liability: Debt; financial commitments.
3. A measure of one's financial health, net worth is calculated as assets less liabilities.
4. Income: Funds obtained through investments or employment.
5. Expense: The cost of products and services.
6. Budget: A strategy for controlling earnings and outlays.
7. Emergency Fund: Money saved for unforeseen expenses.
8. Credit: A loan that will be paid back later.
9. Credit Score: A score that showcases a person's creditworthiness. A good score makes taking the load easier.
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10. Credit Report: A history of repayment record of credit.
11. Credit Limit: The highest amount of money you can take from a credit card or account.
12. Interest: The price of borrowing money or the return on a loan.
13. Annual Percentage Rate (APR): The annual fee associated with borrowing funds.
14. Annual Percentage Yield (APY): The yearly yield from investments or savings.
15. Amortisation: The process of repaying debt over time with consistent payments.
16. Inflation: A rise in prices that lowers their value.
17. Compound interest is interest that is computed by adding previous interest to the original principal.
18. Principal: The original amount of money borrowed or invested.
19. Capital Gains: The amount of money made when an asset is sold for more than its cost.
20. Capital Loss: The loss incurred when an asset is sold for less than its full cost.
Additional Personal Finance Terms:
21. Asset Allocation: Spreading investments across various categories (bonds, stocks).
22. Stock: A portion of a business's ownership.
23. Bond: An interest-bearing loan to a corporation or government.
24. Mutual funds: professionally managed pools of investments.
25. Exchange-Traded Funds, or ETFs, are investment funds that are traded on stock exchanges.
26. Retirement Accounts: Accounts that are used to invest during your working years and to later use after retirement.
27. 529 Plan: It is a tax-benefited account for saving money, especially for school purposes.
28. Diversification: Putting in investments at lower risks.
29. Bankruptcy: When a person is not financially able to repay debts. It is a legal situation.
30. Balance Sheet: It is a statement that consists of equity, liabilities, and assets of your finances.
31. Paycheck Deductions: Money deducted from your salary for insurance, taxes or same sort of purpose.
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32. Fixed Expense: The usual monthly expenses that you have every month, like rent or loan payments.
33. Variable Expense: Monthly expenses that are not fixed, like entertainment, food and other expenses.
34. Debt-To-Income Ratio: The debt-to-income ratio, which is used to determine credit, is calculated by dividing debt by income.
35. Cash Flow: The total inflow and outflow of funds (money).
36. Credit Utilisation Ratio: The ratio of used credit out of available credit is known as the credit utilisation ratio.
37. Savings Account: A safe account to keep money while earning interest.
38. Checking Account: Knowing about your daily transactions and bill payments.
The above-mentioned list of personal finance terms is not just about gathering financial knowledge; they are about making yourself financially secure and not dependent on anybody. They are also about carrying the responsibility of your money, along with being ready in times of crisis. Knowing about these terms is a stepping stone towards a financially confident future built on security and success.
