Personal Finance Basics

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Budget

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A plan that outlines how much money you will earn and spend over a certain period.

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Income

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The money received, typically on a regular basis, for work or investments.

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Expense

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The money spent on goods and services.

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Savings

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Money that is set aside for future use, often in a bank account.

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Investment

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The act of putting money into something (like stocks or bonds) with the expectation of gaining a profit.

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Credit

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The ability to borrow money or access goods or services with the understanding that payment will be made in the future.

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Debt

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Money that is owed to someone else, often as a result of borrowing.

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Interest

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The cost of borrowing money, usually expressed as a percentage of the amount borrowed, or the money earned on savings or investments.

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Needs

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The things you must purchase to survive, including necessities such as rent, utility bills, groceries, and medical expenses, as well as legal responsibilities like paying taxes.

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Wants

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Things that you choose to spend money on, but are not necessary for survival, such as eating out, holiday gifts, TV/streaming subscriptions, and new clothes.