Essential terms in personal finance, defined plainly.

Non-essential expenses such as dining out, entertainment, and travel, which can be adjusted without affecting basic needs.

A recurring cost that stays roughly the same each period, such as rent, insurance premiums, or a loan payment.

Annual Percentage Rate: the yearly cost of borrowing expressed as a percentage, including interest and certain fees.

The share of your available revolving credit currently in use; lower utilization generally supports a stronger credit score.

A lender's formal review of your credit report during an application, which can temporarily lower your score.

Liquid savings, typically three to six months of essential expenses, reserved for unexpected income loss or urgent costs.

A savings account that pays a materially higher interest rate than a standard bank account while remaining fully liquid.

Interest calculated on both the original principal and previously accumulated interest, causing balances to grow at an accelerating rate.

A fund designed to mirror the composition of a market index, offering broad diversification at low cost.

The annual fee a fund charges its investors, expressed as a percentage of assets under management.

The mix of stocks, bonds, and other asset classes in a portfolio, chosen to match an investor's goals and risk tolerance.

Investing a fixed amount at regular intervals regardless of price, smoothing out entry points over time.

The tax rate applied to your next dollar of income, rather than the average rate applied to your entire income.

A fixed dollar amount that reduces taxable income for filers who do not itemize deductions.

An account such as a 401(k), IRA, or HSA that offers tax benefits on contributions, growth, or withdrawals.

A neutral account that holds funds or documents until the agreed conditions of a real estate transaction are satisfied.

The gradual repayment of a loan through scheduled payments that cover both interest and principal over time.

Private Mortgage Insurance: a premium typically required when a conventional mortgage down payment is less than 20 percent.

A business structure where profits are taxed on the owner's personal return rather than at the entity level.

Revenue minus the direct cost of producing goods or services, expressed as a percentage of revenue.

The length of time a business can operate before exhausting its cash reserves at the current burn rate.

Coverage for a fixed period that pays a death benefit only if the insured passes away within that term.

The value of everything you own minus everything you owe — a snapshot of overall financial position.

An advisor legally obligated to act in the client's best interest, above their own or their firm's compensation.