Financial Terms 101: Beginner Level

Ever since the dollar rate fluctuation, everyone has taken their finances more seriously and we absolutely love to see it. However, before you start putting your money in, it is important for you to know some basic financial terms.

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Assets: These are the valuable things you own, like your car, savings, or investments. Think of them as your financial foundation.
Liabilities: These are your debts, the money you owe, such as loans, credit card balances, or unpaid bills. Aim to keep your liabilities lower than your assets.
Budget: This is your spending plan, a roadmap to keep your finances on track. It allocates your income towards expenses and savings. Fintech: This is shorthand for “financial technology.” These are companies that use technology to deliver financial services, like mobile banking apps or online investment platforms.
Loan: Money you borrow from a lender, like a bank or online platform, with the promise to repay it with interest.
Interest: The cost of borrowing money. It’s essentially a fee the lender charges for letting you use their money. The lower the interest rate, the better the deal for you.
Principal: The actual amount of money you borrow in a loan.
Repayment: Paying back the borrowed money (principal) plus the interest over a set period.
Investing for the Future: Investment: Putting your money to work to grow it over time. This could involve stocks, bonds, or real estate.
Return on Investment (ROI): This is the profit you make on your investment. It’s calculated by dividing the gain by the amount you invested.

In Conclusion

Knowledge is power, especially when it comes to your finances. Don’t be afraid to ask questions and research unfamiliar terms. By taking control of your financial literacy, you’ll be well-equipped to weather any economic storm and secure a brighter financial future!