Money words

Plain-English meanings of the money terms that come up in the news. Teachers: these are the definitions the worksheet answer keys use.

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401(k): A retirement savings plan you get through a job. Money usually goes in before taxes, and some employers add extra money, called a match.
APR: Annual percentage rate: the yearly cost of borrowing money, shown as a percent. It includes interest and some fees. Many credit cards charge more than 20%.
Asset: Something you own that has value, like cash, a car, a house or stocks.
Bear market: A stretch when stock prices fall 20% or more from a recent high.
Bond: A loan you make to a government or company. It pays you interest and returns your money on a set date.
Budget: A plan for how you'll spend and save the money you expect to get.
Bull market: A long stretch of rising stock prices, usually counted from a 20% climb off a low.
Capital gain: The profit when you sell something, like a stock, for more than you paid. It's usually taxed.
Certificate of deposit: A savings account, often called a CD, that pays a fixed interest rate if you leave your money in for a set time, like a year. Taking it out early usually costs a penalty.
Checking account: A bank account for everyday spending. You use it with a debit card, transfers and bill payments.
Commodity: A basic raw material, like oil, wheat or copper, that is bought and sold in large amounts. Its price moves with supply and demand.
Compound interest: Interest you earn on your interest. Over time, it makes savings grow faster and faster.
Cost per month: The price of something divided by the number of months you use it. It shows the real cost of a big purchase.
Cost per use: The price of something divided by the number of times you use it. A cheap item you rarely use can cost more per use than a pricey one you use daily.
Credit card: A card that lets you borrow money to pay for things. If you don't pay the full bill each month, you're charged interest on what's left.
Credit report: A record of how you've borrowed and paid back money. You can check yours for free at AnnualCreditReport.com.
Credit score: A number, usually from 300 to 850, that tells lenders how likely you are to pay back what you borrow. Paying bills on time is the biggest factor.
Credit utilization: How much of your available credit you're using. Using a small share of your credit limit is better for your score.
Crude oil: Oil as it comes out of the ground, before it is made into gas and other fuels.
Debit card: A card that spends money straight out of your bank account.
Deductible: The amount you pay yourself before your insurance starts paying.
Demand: How much of something people want to buy at each price. When the price goes up, people usually buy less.
Diversification: Spreading your money across many different investments so one bad one can't sink you.
Dividend: A share of a company's profits paid out to the people who own its stock.
Dow Jones Industrial Average: A stock market index that tracks 30 large U.S. companies.
Down payment: The part of a big purchase, like a car or home, that you pay up front instead of borrowing.
Earnings per share: A company's profit divided by its number of shares. Wall Street compares it with what analysts expected.
Emergency fund: Money set aside only for surprises, like a car repair or a lost job. A common goal is three to six months of expenses, built up over time.
Equilibrium price: The price where the amount people want to buy equals the amount sellers want to sell.
ETF: Exchange-traded fund: a fund that holds many investments and trades on the stock market like a single stock.
FDIC insurance: Government protection for money in U.S. bank accounts, up to $250,000 per depositor at each insured bank, for each type of account ownership.
Federal Reserve: The U.S. central bank, often called the Fed. It raises or lowers a key interest rate to keep prices stable and jobs plentiful.
FICA: Social Security and Medicare taxes taken out of your paycheck. For most workers, they add up to 7.65% of pay.
Free cash flow: The cash a company has left after paying its bills and investing in the business. Investors watch it to see how healthy a company is.
GDP: Gross domestic product: the total value of the goods and services a country produces. It's the main measure of how big an economy is.
Gross pay: What you earn before taxes and other deductions come out.
Guidance: A company's forecast of its future sales or profits. Stocks often move more on guidance than on past results.
Identity theft: When someone uses your personal information, like your Social Security number, to open accounts or borrow money in your name.
Index fund: A fund that buys every stock in an index, like the S&P 500, so you own a small piece of all of those companies. Fees are usually low.
Inflation: When prices rise across the economy, so each dollar buys a little less.
Interest: The price of borrowing money. Borrowers pay it, and savers earn it.
Interest rate: Interest shown as a percent of the amount borrowed or saved, usually per year.
Liability: Something you owe, like a loan or a credit card balance.
Loan term: How long you have to pay back a loan, like 60 months for a car loan.
Memory chip: A computer part that stores data, found in phones, laptops and game consoles.
Miles per gallon: How many miles a car can go on one gallon of gas. A higher number means the car uses less fuel.
Minimum payment: The smallest amount you can pay on a credit card bill without a late fee. Paying only the minimum can keep you in debt for years.
Mortgage: A loan to buy a home, usually paid back over 15 or 30 years.
Mutual fund: A fund that pools money from many investors to buy stocks, bonds or both.
Nasdaq Composite: A stock market index of the thousands of companies listed on the Nasdaq exchange. It leans heavily toward tech companies.
Net pay: What's left of your paycheck after taxes and other deductions. Also called take-home pay.
Net worth: Everything you own minus everything you owe.
Opportunity cost: What you give up when you choose one thing over another.
Overdraft: When you spend more than you have in your bank account. Banks may charge a fee or decline the payment.
Phishing: A scam message that pretends to be from a real company to trick you into giving up passwords, codes or money.
Premium: What you pay for insurance, usually every month or every year.
Price target: Where a Wall Street analyst thinks a stock will trade in about a year.
Purchasing power: How much a dollar can buy. Inflation lowers it.
Recession: A big, widespread drop in economic activity that lasts more than a few months.
Revenue: All the money a company brings in from sales, before any costs are taken out.
Roth IRA: A retirement account you fund with money you've already paid taxes on. It can grow and come out tax-free in retirement if you follow the rules. You need income from work to put money in.
Savings account: A bank account for money you're setting aside. It pays some interest.
Savings goal: A specific amount of money you want to save by a certain time, like $400 for a console in 16 weeks.
Shortage: When people want to buy more of something than sellers have, usually because the price is too low.
S&P 500: A stock market index that tracks about 500 of the biggest U.S. companies. It's the most common way to measure how the market did.
Stock: A small slice of ownership in a company. One unit is called a share.
Stock buyback: When a company uses its cash to buy back its own shares, leaving fewer shares for everyone else.
Supply: How much of something sellers are willing to sell at each price. When the price goes up, sellers usually offer more.
Supply and demand: Prices tend to rise when people want more of something than is available, and fall when there's more than people want.
Surplus: When sellers have more of something than people want to buy, usually because the price is too high.
Tariff: A tax on goods brought in from another country. The importing business pays it, and some of the cost often reaches shoppers.
Treasury: A loan you make to the U.S. government. Treasuries are considered one of the safest investments.
Unemployment rate: The share of people who want a job and are looking for one but don't have one.
Unit price: The price of one unit of something, like one can or one ounce. It lets you compare different package sizes.
W-4: A form you fill out when you start a job. It tells your employer how much federal income tax to take out of each paycheck.
Yield: The yearly return an investment pays, shown as a percent. For bonds, yields go up when prices go down.