Many of these definitions were sourced from the books listed in the resources or from online sources like Investopedia.
Adjusted Gross Income (AGI) - The number that the Internal Revenue Service (IRS) uses to determine your income taxes owed for the year. It represents your total taxable income after specific adjustments, influencing not only how much tax you owe but also your eligibility for certain tax deductions and credits. See also: Gross Income and Net Income. AGI is calculated before deductions and takes into account things like student loan interest and self-employment tax deductions.
Annual Percentage Rate (APR) - The annual cost of borrowing money (e.g. interest on credit card debt). The percentage rate has a greater impact on higher amounts.
Annual Percentage Yield (APY) - The annual interest earned on an interest-bearing account. Get used to the word "yield" it shows up often in financial texts.
Asset - Anything that is money or has a monetary value. It produces income for its owner or could produce income if used or sold. There are different types of assets, some of which overlap or are inclusive of other types:
Financial/Liquid asset: monetary-based asset like money in a savings, checking or investment account.
Fixed asset: an item of value that is used to generate income for longer than a year (equipment, property, or plant, like a manufacturing facility).
Tangible asset: anything a business owns that has value (this can include both financial and fixed assets).
Intangible asset: things that are owned and may generate income but lack physical substance, like copyright ownership, trademark, and patents.
Depreciating asset: a fixed asset that only loses value over time, like a car.
Budget - A financial plan, usually outlined for a specific future period of time. Budgets can be made for any entity that needs or wants to spend money, including governments and businesses, people, and households of any income level.
Compound Interest - The interest earned on the combined total of the principle (original amount) and previously earned interest.
Emergency fund - A savings account that acts as a buffer to cover the costs of unexpected emergencies and unplanned expenses. Most personal finance specialists recommend keeping an emergency fund in an interest-earning account, like a high-yield savings account (HYSA) or money market (MM) account.
Employer Contribution and Matching Contribution - The employer contribution is money the employer contributes to a retirement account, even if the employee doesn't contributing anything. The matching contribution is made in addition to the employer contribution and does depend on whether or not the employee contributes to their retirement account: it matches what the employee contributes, usually up to a percentage of the employee's salary.
Fiduciary - A financial professional who is legally and ethically obligated to act in your best interest, not theirs.
Gross Income - In personal finance, it's a person's total earnings before taxes or other deductions are taken out. It includes income from all sources, not just from employment and is not limited to income that's received in cash. It also includes property or services received. On a paycheck, it's often listed as gross pay. See also: Adjusted Gross Income and Net Income.
High-Yield Savings Account (HYSA) - A savings account that pays a higher interest rate than traditional savings accounts offered by big banks.
Home Equity/Car Equity - Equity is how much someone owns of an asset that they still owe money on. Home equity is a home's current market value minus what is owed on the mortgage. E.g.: for a home with a current market value of $500K, a owner still owes $300K, so their home equity is $200K. It's similar for car equity: the car's current value minus what the person owes on the loan.
Liability - Something that a person or company owes, often a sum of money. Essentially, the opposite of an asset (defined above). In personal finance, this would be things like car loans that a person still owes money on.
Money Market (MM) Account - A type of account that blends the features of a checking account and high-yield savings account (HYSA). It has a higher annual percentage yield (APY) than regular savings accounts, and provides relatively easy access to the funds like a checking account.
Net Income - In personal finance, net income is the money you make after all deductions and taxes are subtracted from your total income. It is often reflected on a paycheck stub as your take-home pay. Also see: Adjusted Gross Income and Gross Income.
Net Worth - A person's total assets (what they have or own) minus their total debts and liabilities (what they owe).
Opportunity Cost - I include this because it's an interesting concept. According to Investopedia, it represents the desirable benefits someone foregoes by choosing one alternative instead of another, To properly evaluate opportunity cost, the costs and benefits of every option available must be considered and weighed against the others. This is a financial term, but it's also a lifestyle concept. Considered as strictly monetary, if you spend money now, you can't invest it in your future. On the flip side, you also need to consider the availability of opportunities over time. If you spend money to attend a conference for example, that could lead to building your professional network and future job opportunities. Your time and health are also factors when measuring opportunity cost. These things need to be evaluated on a rolling basis. Annoyingly, only some can be evaluated in hindsight. (I didn't write explicitly about opportunity cost in Issue #1 of the zine so I used the Glossary to talk about it here. ✨ This would make a great article or personal reflection!)