Navigating financial terms and jargon can be challenging, but we’re here to make it more accessible so you can get back to what matters most.
We put this personal finance glossary together for you to have throughout your financial journey. (Pro tip: make sure to bookmark this page in your browser so you can quickly refer to it whenever necessary!)
Amortization – The process of gradually paying off a loan over time through scheduled payments that include both principal and interest.
Annual Percentage Rate (APR) – The total cost of borrowing money, including interest and certain fees and charges associated with a loan, expressed as a yearly percentage.
- Example: On a $1000 loan at 20% APR, you would pay $200 in interest in a year, assuming no additional payments are made to reduce the principal.
Cash Advance – A cash advance (sometimes called a payday loan or Payday Boost at Money Mart) provides a small, unsecured, short-term loan that is usually repaid on the borrower’s next payday.
Cash Flow – The amount of money coming into a household (in the form of wages, investment earnings, etc.) minus the amount going out (via debts and expenses). A positive cash flow indicates that there is more money coming into a household than being spent.
Compound Interest – Interest calculated on both the initial principal and the accumulated interest from previous periods, allowing savings or debt to grow potentially over time.
Credit Score – a key factor that lenders look at when deciding whether to approve you for things like personal loans, credit cards, car loans, homes, or even a cell phone plan.
- Pay bills on time – Even one missed payment mayhurt your score.
- Keep credit card balances low – Try to use less than 30% of your credit limit.
- Avoid applying for too much credit at once – Too many applications can be a red flag.
- Check your credit report regularly – Look for errors and dispute anything that doesn’t look right.
- Keep older accounts open – A longer credit history can help boost your score.
Debt-to-Income (DTI) Ratio – A comparison of the total amount of money someone owes in relation to their total income. This ratio is a good indicator of whether someone can afford to borrow more money. In general, lowering your debt-to-income ratio can raise your credit score and help you lower your interest rate.
Fixed Expenses – Cash obligations that remain the same every month (some examples include rent or mortgage, car insurance or auto payments, student loans, etc.).
Income – Money received from various sources, such as wages, salaries, business profits, investments, rental properties, or government benefits.
- Gross income refers to total earnings before deductions like taxes and benefits.
- Net income is the amount left after all taxes and deductions are subtracted, representing the actual take-home pay
- Fixed income includes consistent earnings from sources like salaries, pensions, or annuities.
Installment Loan – A type of loan repaid over time with a set number of scheduled payments, typically monthly. Examples include auto loans, student loans, and personal loans (we have this service at Money Mart).
Non-Sufficient Fund Fees (NSF) – Returned or "bounced" cheque fees are charged to an account holder when the bank returns a cheque unpaid because there was not enough money in the bank account to cover the cheque amount.
Prepaid Card – A card that you load with money in advance, which can then be used like a debit card. It’s a helpful tool for budgeting and for those who don’t use traditional bank accounts.
Revolving Credit – A type of credit that allows borrowers to repeatedly borrow up to a set limit, as long as they make minimum payments (e.g., credit cards).
Secured Loan – A loan backed by collateral. If the borrower doesn’t repay, the lender can repossess or place a lien on the collateral of the asset (such as a car or house).
Unsecured Loan – A loan that doesn’t require collateral. Approval is often based on credit score and income.
Variable Expenses – Cash obligations that vary from month to month (examples include dining out, entertainment, gas, shopping, and travel)
And there you have it; a handy cheat sheet to help you throughout your financial journey. We hope this guide made things simple, supportive, and maybe even a little fun.
Keep this guide close and remember—you've got this (and we've got you).
