Credit and Loans
This three-digit number determines your creditworthiness and can affect your ability to get a loan.
What is a credit score?
This annual document is used to report your income to the government and determine how much you owe in taxes or will be refunded.
What is a tax return?
This government program provides income to retirees based on their earnings history and is funded through payroll taxes.
What is Social Security?
This term describes the money left over after paying all taxes, deductions, and expenses.
What is net income?
This simple budgeting rule recommends dividing income into three categories: 50% for needs, 30% for wants, and 20% for savings.
What is the 50/30/20 rule?
This is the term for the additional cost of borrowing money, usually expressed as a percentage of the loan amount.
What is interest?
This term refers to the percentage of your income that is paid in taxes, often increasing as your earnings rise.
What is a tax bracket?
This type of retirement account allows individuals to contribute pre-tax income, which grows tax-deferred until it is withdrawn during retirement.
What is a traditional IRA (Individual Retirement Account)?
This term refers to the percentage used to calculate the cost of borrowing money or the return on investment.
What is the interest rate?
This type of savings account offers a higher interest rate than a regular savings account but typically requires a larger minimum balance.
What is a high-yield savings account?
This term refers to the maximum amount of money a lender will allow you to borrow on a credit card or loan.
What is a credit limit?
This is the form provided by an employer that reports annual wages paid to an employee and the taxes withheld.
What is a W-2 form?
This type of employer-sponsored retirement plan allows employees to contribute a portion of their salary, often with employer matching contributions.
What is a 401(k) plan?
This term refers to the decrease in purchasing power of money over time, typically measured by the rise in prices of goods and services.
What is inflation?
This savings strategy involves automatically transferring a fixed amount of money from your checking account to your savings account on a regular basis.
What is automatic savings?
This type of loan is secured by an asset, such as a house or car, which the lender can seize if the borrower fails to repay.
What is a secured loan?
This term refers to the amount of income earned before taxes and other deductions are taken out.
What is gross income?
This type of IRA (individual retirement account) allows individuals to contribute after-tax income, with qualified withdrawals during retirement being tax-free.
What is a Roth IRA?
This term refers to the total value of assets minus liabilities, often used to measure an individual's or organization's financial health.
What is net worth?
This strategy involves using financial tools like certificates of deposit (CDs) and money market accounts to earn higher returns while keeping savings relatively accessible.
What is interest-bearing savings?
This term describes the process where a borrower consolidates multiple debts into a single loan, often to secure a lower interest rate or simplify repayment.
What is debt consolidation?
This term refers to the process of legally reducing your taxable income through deductions, credits, and exemptions without evading taxes.
What is tax optimization?
This term refers to the minimum amount that must be withdrawn annually from certain retirement accounts starting at age 73, according to U.S. law.
What is a Required Minimum Distribution (RMD)?
This term refers to the profit made from an investment, calculated as the difference between the purchase price and the selling price.
What is capital gain?
This term refers to the practice of saving and investing money gradually over time to minimize risk and take advantage of market fluctuations.
What is dollar-cost averaging?