Account Statement a written report of your finances.
Bank a business that keeps money for individual people or companies, exchanges currencies, makes loans, and offers other financial services.
Be Persistent you know what that means, but it’s important enough to say it again—be persistent!
Bond a debt instrument issued by a government or company promising to pay back borrowed money at a fixed rate of interest on a specified date.
Borrower a person who gets money for a period of time knowing that the money must be returned.
Broker a specially licensed person who trades stocks on the exchanges for other people.
Brokerage Account like a bank account, but with a brokerage firm.
Budget a plan specifying how resources, especially time or money, will be allocated or spent during a particular period.
Bull or Bear Market a bull market is a period of generally rising prices. A bear market is a general decline in the stock market over a period of time.
Business Plan a plan that sets out the future strategy and financial development of a business, usually covering a period of several years.
Buy Low and Sell High when buying and selling stock in particular, it’s best to purchase when the cost is low and then sell when the price is high, thus increasing your profit (much easier said than done).
Career a job or occupation regarded as a long-term or lifelong activity.
CD (Certificate of Deposit) similar to a savings account in that it is insured and thus virtually risk-free, though it requires a deposit for a set period of time.
Commission a fee paid to an agent for providing a service, especially a percentage of the total amount of business transacted.
Compound Interest interest calculated on the initial principal and also on the accumulated interest of previous periods of a deposit or loan.
Credit a loan of money between a borrower and a lender. The debt is then repaid through a series of payments, plus interest. A credit card is a classic example.
Credit Union a cooperative savings association that offers financial services to its members at reduced interest rates.
Crowd Funding the practice of raising funds from a large group of people (usually) over the Internet toward a common service, project, product, investment, cause, or experience.
Custodial Account an account managed by somebody other than the person who benefits from it, e.g., by a parent for a child.
Debt an amount of money, a service, or an item of property that is owed to somebody.
Direct Deposit a paycheck electronically deposited into your bank account.
Diversification reducing your risk by having a variety of investments. We can’t explain it any better than “don’t put all your eggs in one basket.”
Dividend stockholders’ share of a company’s profit, paid either in cash or more shares.
Economic Downturn a drop or reduction in the success of a business or economy.
Emergency Fund money saved for unexpected expenses, such as having to replace the phone you dropped in the toilet.
Exchange where the trading of commodities, securities, or other assets takes place.
Expenses the amount of money spent in order to buy or do something.
Financial Freedom having enough money to live comfortably without actively working, if you don’t want to. What that amount may be is up to you. For some, it is more than a million dollars. For others, it is less than a million dollars.
Fraud the crime of obtaining money or some other benefit by deliberate deception.
Great Depression of the 1930s the deepest and longest economic downturn in U.S. history, which started with the Stock Market Crash of October 1929.
Great Recession of 2008 an economic downturn that began in December 2007, when 8.4 million people lost their jobs in the U.S.
Income the amount of money received over a period of time as payment for work, goods, services, or investments.
Index the average price of a chosen group of stocks traded on an exchange like the NYSE or NASDAQ.
Index Fund a mutual fund that invests in companies listed in an important stock market index in order to match the market’s overall performance.
Inheritance something, often money or goods, passed on when a person dies.
Interest a small fee that a borrower pays to a lender.
Internship a method of on-the-job training.
Investing putting money into a business, project, property, and so on, with the plan of making more money.
IPO (Initial Public Offering) when shares of stock in a company are sold to the general public, on a securities exchange, for the first time.
IRA short for an Individual Retirement Arrangement, it’s an untaxed retirement account that often contains investments like stocks, bonds, certificates of deposit, and more. You just can’t withdraw the money until you’ve reached a certain age.
IRS (Internal Revenue Service) a government agency in charge of collecting taxes; you don’t want to mess with them.
Job Interview a meeting during which a job applicant is asked questions; it is a way for an employer to get to know you better.
Lender a person or institution that offers money with the understanding it will be returned.
Listed describes a company that has been listed on a stock market exchange (like in a grocery store) so people can buy/sell shares in it.
Loan when one person borrows money from another. This debt is repaid by the borrower to the lender, usually with interest.
Long-term Goal a plan ranging over at least 10 years.
Market Capitalization the stock price of a publicly traded company multiplied by all the shares owned.
Marketing the process of communicating the value of a product or service to customers.
Medium-term Goal a plan of action completed in fewer than 10 years.
Mogul No, not a mound of hard compacted snow, but a powerful person in a certain industry.
Mutual Fund a collection of investments, purchased by money collected from many investors. Mutual funds are generally not insured like a savings account. They are an investment tool, usually managed by a Fund Manager, so check for fees and know the success history of the fund before you invest.
Pay Yourself First (PYF) just like it sounds—put money into your savings before you start paying bills, spending it, or giving it away.
P/E Ratio the relationship between the stock price and the company’s earnings (profit) per share of stock.
Ponzi Scheme a pyramid investment swindle, named after Charles Ponzi (1882–1949), in which supposed “profits” are paid to early investors from money actually invested by later participants. Ponzi was a businessman and con artist who became known in the early 1920s as a swindler for his moneymaking scheme.
Portfolio the group of stocks, bonds, real estate, or anything else you have invested your money in.
Principal here we mean the money you start with, not the person whom you get sent to when you act out in class.
Product the material sold as finished goods, also known as a commodity.
Profit what’s left over when you subtract expenses from revenues.
Profit Potential how much money can you really make (a little more specific than “the sky’s the limit”).
Prospectus a legal document that has all the information about a business that someone might want to invest in.
Private Versus Public Company a privately owned company is owned by private investors, shareholders, or owners; there is no way you can invest in one. Whereas a publicly owned company offers its securities (stock/shares, bonds/loans, etc.) for sale.
Rate of Return a profit on an investment over a period of time, expressed as a percentage of the original investment.
Rating Agency a company that issues credit ratings for the debt of public and private corporations.
Record a music disc made of vinyl that would sometimes break and play the same thing over and over and over and over and over and over.
Reference a statement concerning somebody’s (your) character or qualifications from someone you know or have worked for.
Résumé a written description of your work experience and education, usually on one page.
Retirement when you’ve done everything in this book, made your million dollars, and no longer need to work for a living.
Risk and Reward offsetting the chance of something going bad (risk) with the hope something will be very good (reward).
Rule of 72 a simple method for roughly determining how long it will take for an investment to double in value at a specific rate of interest.
Savings Account a bank account that earns interest on money deposited.
Service a set of actions performed to benefit your customers.
Share a way of measuring ownership of something. For example, you might own a “share” of a company by purchasing it on the stock market. You can own one share, or millions of shares, in one investment, or many.
Short-term Goal an immediate plan of action.
Simple Interest a quick way to calculate the cost of interest only on the principal of a loan.
Social Security a social insurance program run by the federal government that gives out retirement, disability, and survivors’ benefits.
State Labor Laws rules in each state that protect the rights and state the duties of workers and employers.
Stock a share in the capital of a company or a unit of ownership (specifically, “common stock”).
Stock Market A market where securities are bought and sold.
Stock Split the division of shares of stock so that shareholders receive more shares at a proportionately lower value, leaving the total value unchanged.
Take a Loss when you sell off your investment and lose money (boo).
Take a Profit when you sell off your investment and make money (yay).
Target Market the specific customers that a company wants to sell its products or services to.
Undervalue to judge the value (worth) of a company as being lower than it really is (or how you may feel after you’ve done all your chores and no one says thank-you).
Value Investing investment in stocks believed to be worth far more than their current prices.
Wall Street a street in New York City that runs through the historical center of the Financial District, which contains the headquarters of many of the city’s major financial institutions. It’s also the home of the world’s largest stock exchange, the New York Stock Exchange, and a figure of speech for all the financial markets of the United States as a whole.
Want something that would be nice to have but you can literally live without.
Windfall a significant, unexpected, large amount of money received at one time.