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Feb 10, 2023

Personal Finance Terms: A Handy Glossary

By Team Stash
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Do you ever feel confused about financial acronyms, such as APR and IRA? If you’re like most people, when you start planning your financial life, you encounter a lot of words and phrases that can leave you scratching your head. Investing resources are full of acronyms and jargon—learning the lingo can be tough for new investors! This glossary of financial terms can help.

43 personal finance terms you should know

That’s where this alphabetical list of common personal finance terms comes in. Whether you’re mixing up credit limits and credit scores or wracking your brain to remember the difference between net and gross pay, this personal finance glossary, featuring dozens of definitions and links to deeper dives, can help clear the fog.


A 401(K) is an employer-sponsored retirement plan that lets you put money away on a pre-tax basis.

Annual Percentage Rate (APR)

Annual Percentage Rate, also referred to as APR, is the percentage of an unpaid loan balance that the lender charges as interest. This is how much interest you pay on your loans each year. (This may also be referred to as an “interest rate.)


A balance is an amount owed, typically on a loan, purchase, or service.


A budget is an estimate of your income and expenses for the month or year, used to plan your financial life.


Compounding is the return earned on principal plus any past earnings and returns. 

Credit limit

A credit limit is the maximum amount you can borrow on a given credit card.

Credit report

A credit report is a document created by a credit agency that contains information about your loan and credit account history.

Credit score

A credit score is a three-number score intended to express how responsible you have been with loans and debt over time.


A creditor is a person or financial institution that lends money.


Debt is money contractually owed by one party to another. In investing, governments and companies borrow money by issuing debt in the form of bonds, notes, and mortgages. Investors buy the debt in exchange for repayment plus interest.

Discretionary income

Discretionary income is money left over after you’ve paid for your monthly essentials, such as rent or mortgage, student loans, and utilities.


Exposure is the total amount of money invested in any one kind of investment. This represents the amount of money an investor could lose in that kind of investment. 

FAANG stocks

FAANG stocks is an acronym for the five tech stocks that have historically performed well compared to the rest of the market: Facebook, Amazon, Apple, Netflix, and Google.


A fiduciary is a person, financial institution, or brokerage that is ethically and legally bound to act in the best interest of a person whose assets they manage.

Financial literacy

Financial literacy is the ability to assess your financial situation so you can make smart decisions about money.

Fixed expenses

Fixed expenses are ongoing living costs that typically remain the same each month, like your rent or mortgage, health insurance premiums, phone bill, and car payments.

Gross pay

Gross pay is the amount you get paid prior to taxes being taken out of your paycheck.

Impulse spending

Impulse spending is an unplanned, on-the-spot decision to buy something.

Interest rate

Interest rate is the percentage of an unpaid loan balance that the lender charges as interest. This is how much interest you pay on your loans each year. (This may also be referred to as an “Annual Percentage Rate” or “APR.”)

Individual retirement account (IRA)

An individual retirement account, also referred to as an IRA, is a retirement account funded with pre-tax income that lets your earnings grow on a tax-deferred basis.

Lifestyle creep

Lifestyle creep is the tendency to spend more as you earn more, particularly on non-essential items.

Lock-up period

An agreement that prohibits company insiders from selling their shares for a specified period of time following an Initial Public Offering (IPO).

Long-term savings

Long-term savings is a savings in an investment or high-yield savings account for bigger goals such as retirement or buying a house.

Market capitalization

Market capitalization is the equity value of a company, defined as the total dollar value of its outstanding shares in the market.


A mortgage is a loan from a financial institution for a house or some other property.

Net pay

Net pay is the amount left over in your paycheck after state and federal taxes have been taken out, as well as deductions for things like Medicare and Social Security.

Net worth

Net worth is the total of your assets (what you own) minus liabilities (what you owe).

Passive income

Passive income is income generated without the owner’s active participation, such as rental income, stock earnings or dividends, and royalties.

Pay gap

A pay gap is the difference between what people in different social groups—like race and gender—are typically paid for doing the same work. Within racial groups, women tend to earn less than men, but racial pay gaps can transcend gender. For example, white women tend to earn more than Hispanic women as well as Hispanic men.

Power of attorney

A power of attorney is a legal document that authorizes one person to take over for another person if that person is unable to make day-to-day decisions, often related to money and property, due to mental incapacity.


Principal is the original amount borrowed on a loan. It’s different from interest, which is a percentage charged periodically and added to the principal.


Rebalancing is an investment strategy that attempts to bring a portfolio back to its target asset allocation by buying or selling stocks, bonds, or funds.


A return is the gain or loss on an investment, such as a stock, bond, fund, or an entire portfolio. It can be calculated as both a dollar amount and a percentage.

Roth IRA

A Roth IRA is a retirement account that lets you contribute money after taxes, allowing earnings to grow tax-free.

Security deposit

A security deposit is money a landlord requires a renter to pay prior to moving in, which is held by the landlord for the duration of tenancy. The purpose is to protect the landlord from losses due to unpaid rent and property damage beyond normal wear and tear.


Auto-Invest is one of the Recurring Transactions strategies to help you automatically save. It lets you build a schedule to save and invest a set amount on a weekly, biweekly, or monthly basis.

Short-term savings

Short-terms savings is money set aside for upcoming expenses, such as vacations or holiday gifts, that you keep in an easily accessible account.


Stock tickers are letters used to identify a security on an exchange for trading purposes.

Top fund holdings

The investments with the greatest market value in any exchange-traded fund (ETF) or mutual fund. Typically, the fund will highlight its top 10 holdings and their weighting in the fund by percentage.

Tracking error

A tracking error is the difference between a portfolio’s performance (aka, return) and the benchmark or index it attempts to track.

Traditional IRA

A traditional IRA is a retirement savings account that lets you put money away on a pre-tax basis. 

Variable expenses

Ongoing living costs that change from month to month. These may include necessities like food and utility bills as well as discretionary spending like entertainment. 

YTD change

The performance of an investment from the beginning of the calendar year up to the most recent trading day.

And there you have it—some common financial terms from A to Z! With this financial glossary at your fingertips, the veritable blizzard of acronyms and financial terms that investors contend with might seem a bit less overwhelming. You may even feel your confidence growing along with your investing vocabulary.

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