Glossary
Click a term to show its defintion.
- Accountant
A professional money manager certified via a CPA who can help you to manage your business or personal finances properly. This includes completing your taxes at the end of each year.
- Accrued Interest
Interested earned but not yet paid out to the investment holder.
- Amortization
The spreading out of debt, including payments and interest, and how much is owed at varied times over the term of a loan.
- Annual Interest Rate
Also known as an Annual Percentage Rate (APR), an Annual Interest Rate is the amount of interest percentage applied to your debt throughout one calendar year. It is typically applied to your debt on a monthly basis.
- Annuity
A fixed amount paid periodically to an investment holder.
- Appreciation
The increase in value of an asset over time. An asset can appreciate over time if the fair market value of an item increases or the demand for an item increases over time. Some items, such as valuable art or collectible, are appreciated over time.
- Arrears
An amount that is owed to a debt that is overdue. If you miss a scheduled expense payment, that amount is now in arrears.
- Assets
Any items of value owned, such as a home, vehicle, business, etc. It can also include small items of value such as jewellery and art.
- Asset Allocation
Where you put your money, whether it be into stocks, investments, a savings account etc.
- Audit
An inspection of an individual or corporation’s financial records and accounts.
- Balance
The amount of cash available within an account. It can also mean the amount left owing on a debt.
- Bankruptcy
The legal process by an individual or entity when debts owed are above and beyond what is able to be paid back. It is a form of financial relief.
- Bear Market
The condition of a market where returns are low and confidence in it is weak. It is often used within the stock market to reflect a market not ready to invest in.
- Beneficiary
Someone who has been named within an estate or on investment or account as who will receive the funds or policy upon your death.
- BIlling Cycle
The time between when one payment is due on an expense or account and when the next one is due.
- Bonds
A type of investment where you loan money to the government or other institution or company for a fixed amount of interest. At the end of the previously chosen time period, you will get your money back plus interest earned.
- Budget
An overview of your monthly expenses and income. It provides you with an outlook on your spending habits and allows you to make adjustments to your spending to reflect your income and enable you to save and invest smartly.
- Bull Market
The opposite of Bear Market, where the stock market is doing well, returns are high, and it is considered a good time by many to invest.
- Capital Gains
The difference between what you paid for something previously and how much it has gone up in worth since then upon selling. For example, buying $500 worth of stock and then selling it for $1000 would result in a $500 capital gain.
- Cash Advance
A cash advance is a money taken from an ATM or transferred to your chequing account from your credit card or another lender. It comes with interest and fees that you will have to pay in return for your advance.
- Cash Flow
An amount of money that is easily accessible by an individual or business and isn’t tied up in stock, investments, assets, etc.
- Compound Interest
The interest on the amount of money borrowed on a loan or deposit. It is earned on the initial amount borrowed as well as the interest made or owed on top of that amount.
- Co-Signor
Someone who signs a loan or contract along with the original borrower and promises to pay the debt in the event that the other people cannot.
- Cost of Living
How much money it would reasonably cost to pay all of your living expenses and run your household within a certain area, such as Toronto or Vancouver.
This amount is typically higher than the minimum wage and is different for each area.
- Credit
One of the most used terms for different purposes. Credit can be used to be money borrowed from a financial institution like a bank (i.e. a credit card) or it can mean an amount of money added to an account. For example, you had a credit of $500 added to your bank account when your paycheque was added. It can also mean an amount of money given at a discount, such as a tax credit.
- Debt
Money you owe and are required to pay back. Debt can be taken when you are given a loan as you are indebted to the debtor until the amount is repaid.
- Deduction
Money that is taken out or removed. You may have expenses deducted automatically from your bank account or have tax payable deducted from your amount owing.
- Depreciation
The decrease in the value of an asset over time from that which was paid. For example, a new car will always depreciate in value as soon as it leaves the lot.
- Discretionary Expense
An expense that isn’t necessary to meet your basic or immediate needs but is nice to have and adds to the comfort and enjoyment of life. Ex. a movie ticket.
- Dividends
The money paid out to shareholders by a company when there is a profit.
- Expenditure
Any amount of money leaving your account to pay a bill or spend elsewhere.
- Expense
A fixed (recurring) or one-time payment made as part of your budget. A phone bill, utilities, etc. are considered expenses. It’s important to have your expenses lower than your income.
- Fair Market Value
The amount of money in which the current market prices determine could be obtained from the sale of an asset. The fair market value of a house fluctuates often.
- FICO Score
Also known as your credit score, it’s the number between 300 and 850 that is the calculation of your credit based on multiple factors. The higher your score, the more likely you will be approved for more credit.
- Financial Advisor
Someone who assists individuals or businesses with making thought-out decisions about their finances both current and future. They will help plan for retirement, a vacation, etc.
- Income
The money you earn from your wages, passive investments, etc. and bring into your bank account each month or over a period of time.
- Inflation
The increase in the cost of goods and services over time and its link to the Canadian dollar.
- Installments
The number of payments paid on a recurring basis to pay off a debt. You may pay off a cash loan, for example, in three equal installments or as a percentage of the amount owed over a period of time.
- Interest Rate
The cost of borrowing is expressed as a percentage rate of the amount borrowed. It will get added to the amount owing during the length of your loan. It can also mean the amount earned on investment above the initial deposit.
- Investment
Goods, both tangible and intangible, purchased with the intent of making a profit or income, for example, an investment property, stocks, and even a high-interest savings account.
- Joint Account
An account owned by two individuals, usually two spouses. Both parties have equal access and responsibility for expenses due from the account.
- Liabilities
Another name for debts owed and usually used as the opposite of assets on a balance sheet.
- Lien
A legal registration against a debtor placed upon a debt owed until it is repaid. For example, a lien is registered against the home until the mortgage is paid off in full.
- Loan
An amount of money borrowed from a bank, financial institution, or person that you are required to pay back. Usually, this debt is paid back with interest.
- Lump-Sum
A one-time payout or payment, usually towards a loan or as a single payment into an account. You can also choose to withdraw the funds of an account or investment as a lump sum.
- Mortgage
A loan taken out from a bank or financial institution to pay for a property. You then repay this amount over a period of time, usually about 25 years.
- Mortgagee
The bank or financial institution lending money for a mortgage.
- Mortgagor
Often confused as the bank or institution doing the lending, the person borrowing funds for a mortgage is referred to as the mortgagor.
- Mutual Fund
A trade-holding investment program funded by shareholders which are then managed by a third party.
- Money Management
The daily management of your finances. The better you are able to manage your finances, for example, ensuring more income is coming in than going out as expenses, the more successful you will be financially.
- Net Worth
The difference between what you own and what you owe, these are called your assets and liabilities.
- Overdraft
Taking money out of your account that is more than the amount you hold. Your bank may provide you with an overdraft limit that you can withdraw the amount of for an additional fee. If you are not given an overdraft, you will have to add funds to your account immediately to prevent the account from bouncing.
- Personal Finance
Your individual finances and everything it includes, such as assets, debts, expenses, etc.
- Periodic Interest Rate
An interest rate that is charged over a specific recurring pay period instead of annually.
- Portfolio
An overview of your assets and liabilities, where your income is coming from and where your expenses are going.
- Rebalancing
Depending on how you want your wealth portfolio to be allotted, for example, 50% into stocks, if you earn a profit that puts it at 60%, you may rebalance your portfolio to reflect your allotment.
- Risk
The potential for a financial investment to have a negative income. Investing in a volatile stock market can be high or low risk. Higher risk typically means a higher reward.
- Savings
Money left over after you pay your expenses and costs each month that you put away for an emergency, a rainy day, or to save for a financial goal.
- Simple Interest
The interest owed on the amount of money borrowed. It does not compound over time, instead, you can calculate it by multiplying the daily interest by the number of days borrowed. It’s likely to be considered “the cost of borrowing.”
- Stock Options
Offered as an incentive by companies, they give the stock buyer the right to purchase stocks at a specific (lower) price within a set period of time if the price of the stock were to increase suddenly.
- Stock Market
Stock exchange where people and investment firms buy and sell stocks.
- Stock
Money a company earns for selling shares on the stock market.
- Treasury Note
Issued by the government, a treasury note has a cash value and is given to an individual to be cashed back in at a later day at a profit. Essentially, you are giving the government a loan.
- Tax Return
The official filing of your income minus deductible expenses and credits, etc., each year.
- Tax Refund
An amount issued back to an individual after filing of the taxes when the taxes paid on the income over the past year are above those that should have been paid when deductions and credits were added.
- Trust
An account created on behalf of an individual, often by an estate, that accumulates interest and/or further payments until the individual reaches the rules expressed to withdraw (reaching a specific age).
- Wealth
The total of your assets and personal finances minus liabilities, debts, and expenses.
- Yield
Money earned from interest on an investment. For example, your stocks may have yielded you $100 in dividends last year.