Glossary
78 terms from "Personal finance basics: budgeting, an emergency fund, and compound interest." Look them up when you get stuck; the first mention in the text carries a hover definition.
| Term | Definition | Source |
|---|---|---|
| take-home pay | The money that actually reaches your account each pay period: gross pay minus taxes and deductions; also called net income. | Wikipedia: Personal budget |
| net income | The same figure as take-home pay, used by budgeting methods to name the base that percentages are applied to. | Wikipedia: Personal budget |
| gross pay | The amount before anything is taken out — the salary in a job offer or the hourly rate on a listing. | Wikipedia: Personal budget |
| deductions | Amounts removed from gross pay besides tax — retirement contributions, health premiums and similar — that shrink what lands in your account. | Wikipedia: Personal budget |
| fixed expenses | Roughly-same-every-month commitments — rent, insurance, a phone plan, a loan payment, a subscription — that are predictable and slow to change. | Wikipedia: Personal budget |
| variable expenses | Outflows that move with your choices and the calendar — groceries, eating out, fuel, clothes, entertainment — made as many small decisions. | Wikipedia: Personal budget |
| money-out | The single total of every outflow in the month: the fixed subtotal plus the variable subtotal. | Wikipedia: Personal budget |
| net pay | The line on a payslip, or the size of a real bank deposit, that shows take-home pay exactly. | Wikipedia: Personal budget |
| bank and card statements | The source of the real transaction list for one month; every outflow on them lands in the fixed pile or the variable pile. | Wikipedia: Personal budget |
| predictability | The single test that decides the fixed-versus-variable sort: whether the amount is set and recurring, not whether the cost matters. | Wikipedia: Personal budget |
| lowest recent month | The base to use when income is irregular (freelance, tips, commission): plan on a recent lean month rather than an average. | Wikipedia: Personal budget |
| sorting by importance | The classic error in Lesson 01's sort: grouping costs by how essential they feel instead of by whether the amount is predictable. | Wikipedia: Personal budget |
| different levers | The reason the fixed/variable split is not busywork: each pile is changed by a completely different kind of action. | Wikipedia: Personal budget |
| budget | A plan for the coordination of income and expenses: deciding in advance what each part of take-home pay is for. | Wikipedia: Personal budget |
| 50/30/20 split | A widely used first-draft split of net income: 50% to needs, 30% to wants, 20% to savings. | Wikipedia: Personal budget |
| zero-based budgeting | The stricter form of the idea: all net income must be allocated ahead of spending, leaving a zero balance in the budget at month end. | Wikipedia: Personal budget |
| zero balance | The end state of a zero-based budget: no dollar left unassigned, drifting and available to leak. | Wikipedia: Personal budget |
| every dollar gets a job | The plain-language statement of zero-based budgeting: assignment, not restriction, is what a budget does. | Wikipedia: Personal budget |
| needs versus wants | The second, independent sort a budget adds — by necessity rather than predictability. A need keeps life running; a want makes it nicer and can be paused. | Wikipedia: Personal budget |
| fixed versus variable | Lesson 01's axis, kept as a separate dimension from need versus want: it tells you which lever changes a cost. | Wikipedia: Personal budget |
| fixed-want | A line that is fixed in amount but pausable in necessity — typically a subscription — and often the fastest place to free up money. | Wikipedia: Personal budget |
| double-tagging | Carrying two tags on every expense line — F/V from Lesson 01 and N/W from Lesson 02 — so both levers stay visible. | Wikipedia: Personal budget |
| savings slice | The 20% of take-home pay that a 50/30/20 draft assigns to saving, named as its own category rather than left as a remainder. | Wikipedia: Personal budget |
| savings line | The leftover converted into a deliberate budget category — a dollar amount you put there on purpose. | Wikipedia: Personal budget |
| savings rate | The share of take-home pay actually going to savings, which the 50/30/20 comparison makes visible and testable. | Wikipedia: Personal budget |
| category limits | The per-category targets a budget compares actual spending against, so a mismatch becomes visible and decidable. | Wikipedia: Personal budget |
| emergency fund | A personal budget set aside as a financial safety net for future mishaps or unexpected expenses; also called a contingency fund. | Wikipedia: Emergency fund |
| contingency fund | The alternative name for an emergency fund, describing the same set-aside safety net. | Wikipedia: Emergency fund |
| cash reserve | The plain description of the fund: money specifically set aside for unplanned expenses or financial emergencies. | Consumer Financial Protection Bureau: An essential guide to building an emergency fund |
| unplanned expenses | The trigger the fund is for; the word doing the work is unplanned, which is what keeps the fund intact. | Consumer Financial Protection Bureau: An essential guide to building an emergency fund |
| essential expenses | The needs total from Lesson 02, and the correct figure to multiply when sizing an emergency fund. | FINRA: Financial Foundations (Build an Emergency Fund) |
| three to six months | The common sizing guideline for an emergency fund, measured in months of living expenses, with the low end as a reachable first target. | FINRA: Financial Foundations (Build an Emergency Fund) |
| starter milestone | A small first checkpoint — often about 500 dollars or one month of needs — that already stops most small surprises from becoming debt. | Consumer Financial Protection Bureau: An essential guide to building an emergency fund |
| liquidity | The access property an emergency fund must have: withdrawable at any time without penalty. | FINRA: Financial Foundations (Build an Emergency Fund) |
| certificates of deposit | One of the safe places named for emergency savings, alongside savings and checking accounts, when insured. | Investor.gov (U.S. SEC): Save for a Rainy Day |
| separate savings account | The everyday answer for where the fund lives: insured, reachable in a day, and kept apart from the account you spend from. | FINRA: Financial Foundations (Build an Emergency Fund) |
| recurring transfer | An automatic, repeating movement of a fixed amount into the fund on payday, so the fund grows without an ongoing decision. | Consumer Financial Protection Bureau: An essential guide to building an emergency fund |
| splitting your direct deposit | The other automation route: sending part of each paycheck straight to the fund before it reaches your spending account. | Consumer Financial Protection Bureau: An essential guide to building an emergency fund |
| total normal spending | Needs plus wants — the figure that must not be used as the base when sizing an emergency fund. | FINRA: Financial Foundations (Build an Emergency Fund) |
| principal | The amount you begin with — the money put in, or the amount borrowed — before any interest. | Wikipedia: Compound interest |
| simple interest | Interest where previously accumulated interest is not added to the principal, so each period earns on the original amount only. | Wikipedia: Compound interest |
| compound interest | Interest accumulated from a principal sum and previously accumulated interest, so the earning base grows each period. | Wikipedia: Compound interest |
| compounding frequency | The number of times per unit of time accumulated interest is capitalized — yearly, monthly, or daily — the n in A = P(1 + r/n)^(tn). | Wikipedia: Compound interest |
| compounded annually | Interest added once a year, so each year's balance is the previous balance times one plus the rate. | Wikipedia: Compound interest |
| compounded monthly | Interest added twelve times a year, which earns slightly more than annual compounding because early interest starts earning sooner. | Wikipedia: Compound interest |
| previously accumulated interest | Last period's interest, which under compounding joins the principal and begins earning on its own. | Wikipedia: Compound interest |
| APY | Annual percentage yield: the one-year savings rate that already includes the effect of compounding frequency. | Consumer Financial Protection Bureau: Regulation DD (Truth in Savings), Appendix A — Annual Percentage Yield Calculation |
| APR | Annual percentage rate: the yearly interest rate charged on debt, the figure credit-card rates are stated as. | Consumer Financial Protection Bureau: What is a credit card interest rate? What does APR mean? |
| unpaid card balance | A credit-card balance carried past the due date, which compounds against you at the card's APR. | Consumer Financial Protection Bureau: What is a credit card interest rate? What does APR mean? |
| minimum payments | The smallest permitted payment on a card, which barely moves the total because unpaid interest keeps rejoining the balance. | Investor.gov (U.S. SEC): Pay Off Credit Cards or Other High Interest Debt |
| compounding curve | The upward-bending shape of a compounding balance, where the largest gains land in the later years. | Wikipedia: Compound interest |
| illustrative rate | A round return figure used to make arithmetic legible — such as 7% or 10% — explicitly not a promised or guaranteed result. | Investor.gov (U.S. SEC): Compound Interest Calculator |
| order of operations | The defensible sequence for money moves: budget, starter fund, high-interest debt, full fund, then invest. | Investor.gov (U.S. SEC): Pay Off Credit Cards or Other High Interest Debt |
| high-interest debt | Debt at a rate no ordinary investment reliably beats — credit cards commonly at 18% APR or more — which compounds against you until cleared. | Investor.gov (U.S. SEC): Pay Off Credit Cards or Other High Interest Debt |
| guaranteed return | The return you get by erasing a debt: the rate you stop paying, earned with certainty and no market risk. | Investor.gov (U.S. SEC): Pay Off Credit Cards or Other High Interest Debt |
| no ordinary investment | The reason debt payoff outranks investing: essentially nothing reliably matches an 18% card rate, and nothing does it without risk. | Investor.gov (U.S. SEC): Pay Off Credit Cards or Other High Interest Debt |
| starter emergency fund | The small buffer built before attacking debt — about one month of essentials or 500 dollars — kept deliberately small so it barely delays the payoff. | Consumer Financial Protection Bureau: An essential guide to building an emergency fund |
| deliberately small | Why the starter buffer is capped rather than completed: it protects the debt payoff without postponing it for long. | Consumer Financial Protection Bureau: An essential guide to building an emergency fund |
| credit cards first | The within-debt priority: aim extra money at the highest-rate balances, which for most people means the cards. | Investor.gov (U.S. SEC): Pay Off Credit Cards or Other High Interest Debt |
| Safety before growth | The rule placing the full emergency fund ahead of long-term investing once expensive debt is gone. | FINRA: Financial Foundations (Build an Emergency Fund) |
| long-term investing | The final step, reached only with a buffer in place and no high-interest debt, where time and compounding work in your favour. | Wikipedia: Compound interest |
| cost of waiting | What a delayed start removes: not just the skipped contributions, but the compounding those early dollars would have done for the whole remaining period. | Wikipedia: Compound interest |
| earliest dollars | The most valuable contributions, because they have the longest time to compound and compounding grows fastest in later years. | Wikipedia: Compound interest |
| long runway | The years a contribution has left to compound, which is the lever that makes small-and-early beat large-and-late. | Wikipedia: Compound interest |
| net loss | The outcome of investing while carrying an expensive balance: a hoped-for return running against a certain, higher debt cost. | Investor.gov (U.S. SEC): Pay Off Credit Cards or Other High Interest Debt |
| one-page money plan | The course's terminal artifact: four blocks plus a current-step line, holding your own numbers on a single glanceable page. | Wikipedia: Personal budget |
| four blocks | The plan's structure: your numbers, budget, emergency fund, and growth projection — each the output of an earlier lesson. | Wikipedia: Personal budget |
| growth projection | The block showing what a fixed monthly amount becomes over multiple time horizons at a modest rate. | Investor.gov (U.S. SEC): Compound Interest Calculator |
| compound-interest calculator | The U.S. SEC's free tool that takes a starting amount, a monthly contribution, a rate, a number of years and a compound frequency, and shows the result. | Investor.gov (U.S. SEC): Compound Interest Calculator |
| fixed monthly amount | The recurring contribution a projection is built on — the amount you plan to add to the principal every month. | Investor.gov (U.S. SEC): Compound Interest Calculator |
| time horizons | The multiple year-lengths a projection is run over — commonly 10, 20 and 30 years — which make the back-loaded shape visible. | Investor.gov (U.S. SEC): Compound Interest Calculator |
| modest rate | The deliberately unambitious return assumption a projection uses, chosen because a rate cannot be promised. | Investor.gov (U.S. SEC): Compound Interest Calculator |
| monthly review | The recurring session that reopens the page, updates the numbers, and advances your step. | Wikipedia: Personal budget |
| review loop | The arrow from the monthly review back to your numbers, which is what keeps every other block true. | Wikipedia: Personal budget |
| current step | The marker on the plan showing which order-of-operations step you are actually on: the first one you have not finished. | Investor.gov (U.S. SEC): Pay Off Credit Cards or Other High Interest Debt |
| single next action | What a finished plan resolves to: one concrete move, not a set of intentions. | Investor.gov (U.S. SEC): Pay Off Credit Cards or Other High Interest Debt |
| glanceable | The design constraint on the plan: readable at a glance, because a page you cannot see at once is a page you will not update. | Wikipedia: Personal budget |
| measured numbers | The requirement that every figure on the page comes from something you actually looked up, not a guess or a placeholder. | Wikipedia: Personal budget |