Finance Glossary
Last updated: April 6, 2026
This glossary explains the most common finance terms used across FinnQuiz guides and games. Use it as a quick reference any time a term feels unfamiliar.
APR (Annual Percentage Rate)
The total yearly cost of borrowing, including interest and fees, expressed as a percentage.
APY (Annual Percentage Yield)
The yearly return on savings that includes compounding.
Asset
Anything you own that has value or could generate future benefit, such as cash, investments, or property.
Liability
Money you owe, such as loans, credit card balances, or unpaid bills.
Net worth
Your total assets minus your total liabilities.
Budget
A spending plan that assigns your income to needs, wants, and financial goals.
Cash flow
The money coming in versus the money going out each month.
Emergency fund
Cash set aside for unexpected expenses like medical bills or job loss.
Sinking fund
Money saved regularly for a planned future expense.
Fixed expense
A cost that stays the same each month, such as rent or insurance.
Variable expense
A cost that changes month to month, such as groceries or fuel.
Discretionary spending
Non-essential spending for enjoyment, such as dining out or entertainment.
Opportunity cost
The value of the best alternative you give up when making a choice.
Inflation
The general rise in prices over time, which reduces purchasing power.
Purchasing power
How much goods or services your money can buy.
Interest rate
The cost of borrowing or the return earned on savings, expressed as a percentage.
Compound interest
Interest calculated on both the original principal and the accumulated interest over time.
Principal
The original amount of money borrowed or invested before interest.
Amortization
Paying off a loan through scheduled payments that cover interest and principal.
EMI (Equated Monthly Installment)
A fixed monthly payment used to repay loans in many countries, including India.
Credit score
A number that reflects credit risk based on payment history, utilization, and other factors.
Credit report
A detailed record of your credit accounts, payment history, and inquiries.
Credit utilization
The percentage of your available credit that you are using.
Debt-to-income (DTI)
The percentage of your income that goes toward paying debts each month.
Minimum payment
The smallest amount you must pay on a debt each period to stay current.
Delinquency
Missing a debt payment past the due date.
Diversification
Spreading investments across assets to reduce risk from any single holding.
ETF (Exchange-Traded Fund)
A basket of assets that trades like a stock and provides diversification.
Mutual fund
A pooled investment that buys a mix of assets on behalf of investors.
Index fund
A fund that tracks a market index with low fees.
Expense ratio
The annual fee charged by a fund, shown as a percentage of assets.
Asset allocation
How you divide investments across stocks, bonds, cash, and other assets.
Risk tolerance
Your ability to handle fluctuations in investment value without panic.
Time horizon
How long you plan to keep money invested before needing it.
Liquidity
How quickly you can turn an asset into cash without losing value.
Volatility
How much the price of an asset moves up and down over time.
Capital gains
Profit earned when you sell an asset for more than you paid.
Dividend
A portion of company profits paid to shareholders.
Bond
A loan you make to a government or company in exchange for interest payments.
Yield
The income earned from an investment, typically shown as a percentage.
CAGR (Compound Annual Growth Rate)
A smoothed annual growth rate over a period of time.
Inflation-adjusted return
Your return after accounting for inflation.
Insurance premium
The amount you pay for insurance coverage.
Deductible
The amount you pay before insurance starts covering costs.
Co-pay
A fixed amount you pay for a service, with insurance covering the rest.
Term life insurance
Life insurance that provides coverage for a specific period.
Health insurance
Coverage that helps pay for medical expenses.
Mortgage
A loan used to buy property, repaid over many years.
Down payment
The upfront money paid toward a purchase, often a home or car.
Loan-to-value (LTV)
The loan amount divided by the asset value, shown as a percentage.
Refinancing
Replacing an existing loan with a new one, often to reduce interest.
Retirement account
A savings account with tax benefits designed for retirement.
401(k)
A US employer retirement plan with pre-tax or Roth contributions.
IRA (Individual Retirement Account)
A US retirement account with tax advantages.
NPS (National Pension System)
India retirement system that allows market-linked contributions.
EPF/PPF
India provident fund schemes that offer long-term, tax-advantaged savings.
Tax bracket
The rate at which your next unit of income is taxed.
GST
Goods and Services Tax applied to many purchases in India.
TDS
Tax Deducted at Source, a tax collected at the time of payment in India.
Gross income
Your total income before taxes or deductions.
Net income
Your income after taxes and deductions.
Credit limit
The maximum amount you can borrow on a credit card.
Credit card grace period
The time you can pay your balance in full without interest.
Late fee
A penalty charged when a payment is missed or overdue.
Balance transfer
Moving debt from one card to another, often to lower interest.
Rule of 72
A quick estimate of how long it takes money to double: 72 divided by the interest rate.
Depreciation
The loss of value of an asset over time.
Maintenance reserve
Money set aside for repairs or upkeep.
Rebalancing
Adjusting your portfolio back to target allocations.
Savings rate
The percentage of income you set aside for future goals.
Tax-advantaged account
An account with tax benefits, such as retirement or education savings accounts.
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