There are so many words in the personal finance lexicon that it can sometimes feel impossible to keep up. That said, welcome to The Wealth Edit’s “Weekly Words,” where we introduce you to increasingly complex personal finance vocabulary words so your vernacular grows along with your personal finance knowledge. If you have any questions about any of these terms, reach out!
Asset
- An economic resource.
- Something of value that you own.
- It could be tangible or intangible.
- Assets count toward your net worth and can be sold to generate money.
Liability
- What you owe somebody.
- These can be short-term or long-term debts.
- Examples of liabilities: Credit card bill; your equated monthly installment (EMI) for your home loan.
Personal Finance
- What we’re all about!
- This term covers managing your money, saving, and investing. It also encompasses
- Budgeting
- Insurance
- Mortgages
- Banking
- Retirement planning
- Investments
- Tax planning
- Estate planning
- Personal finance is an industry that provides financial services to households and individuals and advises them about financial and investment opportunities.
- It’s all about meeting personal financial goals like
- Planning for retirement
- Saving for your child’s college education
- Having enough money for short-term financial needs
- It takes into account
- Income
- Expenses
- Living requirements
- Your financial goals and desires
- …and comes up with a plan accordingly.
- Good personal finance should help you develop skills like
- Budgeting
- Creating an emergency fund
- Using credit cards wisely
- Saving for retirement
- Paying off debt
Stay tuned for more Weekly Words next week!
