Essential Personal Finance Terms For Beginners

Learning effective financial management can sometimes seem like learning a whole new language. But you don’t have to be a financial adviser to talk the talk. Knowing the basics about personal finance will help you make good financial choices today that will set you up for an even better tomorrow.

Here are the most important personal finance terms to master that will lead you down a better financial path.

Important Personal Finance Terms For Beginners

(401)k Plan 

Whether retirement is right around the corner or decades away, it’s important to start saving for the next phase of life. A (401)k plan is one of the most essential personal finance terms to understand for the future.

It’s a retirement plan sponsored by an employer where employees can contribute cash pre-tax from their income. The best part: employers usually contribute to the funds as well. 

Balance Transfer Credit Card

Frequently cited as a great option for those looking to dig themselves out of debt, a balance transfer credit card is a way to move debt from one credit card to another with lower interest rates.

Budget

Your budget is your roadmap to a better financial future. It’s arguably one of the most important personal finance terms to know since it will be used throughout your life.

With a budget, usually created monthly, you keep track of all sources of income and all expenses with the goal of having your income total higher than your total expenses. It’s also a place to track spending and outline financial goals.

Credit Score 

Everyone should know the basics of a credit score as one of the most important personal finance terms.

A credit score is used to represent how well (or not) you’ve used credit throughout your life, considering what you owe, the types of credit you use, and your payment history. Numbers typically range between 300 and 850, with 850 being the highest level of creditworthiness.

Emergency Fund

Think of an emergency fund as an additional savings plan to help you address any financial emergencies that come your way throughout your life. An emergency fund can be used for both short- and long-term expenses, ranging from an unexpected hospital bill to important car repairs.

When life happens, an emergency fund helps keep you financially secure.

Net Income 

You’ve likely heard “net income” among other personal finance terms used by big companies, but it also applies to the average person. Net income simply means the total amount brought in from earnings after subtracting expenses.

Net income is not the same term as net worth, which is determined by adding all of your assets, including property, cars, and what’s in your savings accounts. 

Stocks And Bonds

Rarely are these personal finance terms not used together, but there are significant differences between the two. Stocks are parts of companies that can be purchased with the price of shares dictated by company success, how popular it is with the average investor, and many other factors.

Stocks can also be sold (hopefully for a higher share than you paid). Essentially, when you purchase bonds, you’re actually helping companies by lending them cash. Profit is dictated by the environment in which you first made your bond purchase. 

Liability 

Your personal liability is what you owe and pay each month, everything from credit card payments to student loans. It is often used synonymously with “debt.”

Credit Union

While most people still use traditional banks for their financial needs, credit unions are becoming increasingly popular alternatives. They work the same way as a traditional bank fundamentally, but it requires a membership and is run by union members as a non-profit organization.

On the plus side, they tend to offer lower interest rates and smaller fees than other banks.

Online Title Loan

When there’s a financial emergency, an online title loan can make a big difference through financial assistance that’s paid off over time. An online title loan uses your vehicle’s lien-free title in exchange for a loan. It can offer significant help to those who qualify. Through At Home Title Loans, you can be connected with a lender who can provide a loan of up to $15,000. 

To start the process online, simply fill out the title loan form on the At Home Title Loans homepage and you’ll receive a call from a friendly and knowledgeable lender who will review the next steps and set up a time to meet. Following a quick inspection of your vehicle to determine how much of an online title loan you qualify for, you can get the cash you need as soon as the same day.

Pursue An Online Title Loan Today

Now that you’ve learned some of the most important personal finance terms you’ll use throughout your life, don’t forget to keep an online title loan in mind when facing a financial emergency.

To get started today you can use our online title loan form or give us a call. We’re here to help you.

   

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.