The 4% rule is a retirement guideline that says you can withdraw 4% of your savings in the first year of retirement, raise that dollar amount with inflation each year after, and expect the money to last about 30 years, which turned around means saving 25 times the yearly spending the savings must cover.

A 401(k) is a retirement savings account offered through an employer, funded by a percentage of each paycheck that goes in before income tax is taken, often with a matching contribution from the employer, and invested in funds you choose from the plan's menu until you withdraw it in retirement.

The 50/30/20 rule is a budgeting guideline that splits take-home pay into three shares, no more than 50% for needs, no more than 30% for wants, and at least 20% for saving and paying down debt, as a check on the shape of a month's spending rather than an amount for each category.

An ACH transfer is an electronic movement of money between bank accounts in the United States through the Automated Clearing House network, sent in batches and usually settled in one to three business days, and it is how paychecks, autopay bills and most transfers from one bank to another travel.

APR, the annual percentage rate, is the yearly cost of borrowing expressed as a percentage of the balance, including interest and, on most loans, the required fees, so that two offers can be compared on one number.

APY, the annual percentage yield, is the interest a deposit account pays over a year expressed as a percentage of the balance, with the effect of compounding included, so that accounts which credit interest on different schedules can be compared on one number.

Account aggregation is the gathering of balances and transactions from all of your financial accounts, at different banks, card issuers, brokerages and lenders, into one view, done with your permission by a connection service that reads the data on a schedule and cannot move money.

Amortization is the repayment of a loan in equal scheduled payments, each covering the interest due for the period and retiring part of the principal, so that the balance reaches zero on the last payment and the schedule shows in advance how every payment splits between the two.

Appreciation is an increase in an asset's market value over time that can raise your net worth without producing spendable cash.

An asset is anything you own that could be sold or withdrawn for a meaningful amount of cash, counted at what it would sell for today rather than what you paid, and the sum of your assets is the side of net worth that everything you owe is subtracted from.

Autopay is a standing instruction that pays a bill on its due date without you doing anything each time, either by the biller pulling the amount from a card or bank account you stored with it or by your bank pushing a set payment on a schedule you chose.

The available balance is the amount in a bank account that can be spent right now, which is the posted balance minus pending card purchases and any deposit the bank has not yet released, and it is the figure the bank checks before paying an item.

A balance transfer moves a balance from one credit card to another card that charges a lower rate, often a promotional 0% APR for a set number of months, in exchange for a fee that is usually a percentage of the amount moved, so that payments during the promotional period go to the balance instead of to interest.

A bare-bones budget is your monthly budget with everything optional removed, only the essentials that must continue, housing, utilities, groceries, transport, insurance and minimum debt payments, and its total is what one month costs when income stops.

A billing cycle is the stretch of days, usually about a month, over which a card issuer, utility or subscription service adds up what you owe before issuing one bill for it, and its closing date, not the calendar month, decides which charges land on which statement.

A brokerage account is an investment account at a brokerage firm that holds cash and the stocks, bonds and funds bought with it, with no limit on what goes in and no age rule on what comes out, and with its dividends and any gains realized by selling taxed in the year they happen.

A budget is a plan for the month ahead that gives each kind of spending an amount and sets the total of those amounts beside the income you expect, so that you know before the month starts whether the plan fits and can check each category against its amount while the month runs.

Budget billing is a utility payment plan that uses estimated usage and rates to set predictable monthly payments, with payment adjustments or reconciliation to account for actual charges rather than a discount on the service.

A budget category is one kind of spending or income in a budget, such as groceries or rent, that every transaction of that kind is filed under, so that the category's total can be given an amount, compared with it during the month, and compared with the same total last month.

A budget rollover carries a category's unspent amount into the next month instead of resetting it, so the money available in that category grows until it is used, and overspending carries forward as a negative balance the same way.

A car lease is a contract that lets you use a vehicle for a specified period in exchange for payments under agreed conditions, such as mileage limits and wear standards, without those payments alone making you the owner.

A cash advance is cash drawn against a credit card's credit line, at an ATM, a bank counter or through a convenience check, charged a fee on the day it is taken and interest from that day at a separate, usually higher APR with no grace period.

Cash flow is the money that came in over a period minus the money that went out, with transfers between your own accounts left out; a positive figure is money you kept and a negative one is money you borrowed or drew from savings.

A cash flow forecast is a projection of an account's balance day by day for the weeks ahead, built from today's balance, each expected paycheck on its date, each bill on its due date and a daily rate for everything else, and read for the lowest point the balance reaches before the next paycheck.

A certificate of deposit is a bank deposit that pays a fixed interest rate for a fixed term, from a few months to several years, in exchange for leaving the money untouched until the term ends, with a penalty of some months of interest for withdrawing early.

A chargeback is the reversal of a card charge by your card issuer after you dispute it, which pulls the money back from the merchant through the card network instead of waiting for the merchant to refund it, and is the remedy for fraud, duplicate charges, orders never delivered and charges that continue after a cancellation.

A checking account is a bank deposit account built for everyday money in and out, where paychecks land and bills, card purchases and cash withdrawals are paid from, with no limit on transactions and little or no interest on the balance.

Compound interest is interest computed on the original balance plus all the interest already credited to it, so that each period's interest is larger than the last and a balance left alone grows along a curve that steepens with time.

Cost per use is a purchase's cost divided by the number of times it is used, using actual use for a measured figure or expected use for an estimate.

A credit limit is the most a lender lets you owe on a revolving account such as a credit card at any one time, set by the lender from your income and credit history, and it is the ceiling your balance is measured against for available credit and for credit utilization.

A credit score is a three-digit number, on a scale that most often runs from 300 to 850, computed from the history in your credit report to predict how likely you are to repay what you borrow, and lenders use it to decide whether to approve you and at what rate.

Credit utilization is the share of your available card credit you are using, the balances on your credit cards divided by their limits, expressed as a percentage and measured from the balances your card issuers report to the credit bureaus, which is usually each card's statement balance.

The debt avalanche is a payoff method that pays the minimum on every debt and sends all extra money to the debt with the highest interest rate first, then rolls that debt's payment onto the next highest rate, so the same monthly total clears the debts at the lowest possible interest cost.

Debt consolidation is replacing several debts with one new loan that pays them off, so that a single payment at a single interest rate with a single end date takes the place of many, which lowers the cost only when the new rate is lower and the term is not stretched far past the old payoff.

The debt snowball is a payoff method that pays the minimum on every debt and sends all extra money to the smallest balance first, then rolls that debt's payment onto the next smallest, so the debts disappear one at a time from smallest to largest.

A debt-to-income ratio is your total monthly debt payments divided by your gross monthly income, expressed as a percentage, and it is the figure lenders use to judge whether you can carry a new payment on top of the payments you already make.

Depreciation is the fall in what an asset would sell for as it ages and is used, steepest on a car in its first year, and because net worth counts every asset at today's value that fall comes straight off your net worth whether or not you ever sell.

Direct deposit is an electronic payment sent straight into your bank account through the ACH network, most often a paycheck, a tax refund or a government benefit, so the full amount is in the account on the payment date with no check to deposit and no hold on the funds.

Discretionary income is what remains of take-home pay after the essentials are paid, housing, utilities, groceries, transport, insurance and minimum debt payments, and it is the only part of a month's income that involves a decision.

Discretionary spending is the money you spend by choice each month, on dining out, entertainment, clothing, travel and the like, as opposed to the rent, utilities, insurance and debt payments that are owed regardless, so it is the part of a budget that can change this month without cancelling or renegotiating anything.

A down payment is the part of a purchase price, most often a home's, that you pay in cash at closing rather than borrow, so the loan covers the rest and its size sets the loan amount, the monthly payment and whether mortgage insurance is charged.

A due date is the day a payment must reach a biller to count as on time, fixed by the biller when the account was opened and repeated at the bill's interval, and the point after which a late fee applies and the days toward a reported late payment begin to count.

An emergency fund is cash kept in a separate savings account to cover essential expenses when income stops or a large unplanned cost lands, usually sized at three to six months of essentials and built one month at a time.

An employer match is money an employer adds to your 401(k) or similar workplace retirement account in proportion to what you contribute yourself, by a formula such as half of what you put in up to a set percentage of your pay, so that contributing at least that percentage collects the full amount.

The envelope system is a budgeting method that gives each kind of flexible spending a fixed amount for the month, originally as cash in a labeled envelope, and stops spending in that category when its envelope is empty, so the limit is enforced by the balance rather than by willpower at the register.

Escrow is money held by a third party on someone's behalf until it is owed, and on a mortgage it is the account the lender keeps to pay property tax and homeowners insurance, funded by a share of each yearly bill added to the monthly payment.

Estimated tax consists of payments made during the year toward US federal income tax and any applicable self-employment tax not adequately covered by withholding.

FDIC insurance is the federal guarantee that the money in checking, savings, money market and CD accounts at an insured bank is paid back if the bank fails, up to $250,000 per depositor, per bank, for each ownership category, automatically and at no cost to the depositor.

Fair market value is the price an asset would reasonably sell for on a particular date between an informed, willing buyer and seller, with neither forced to make the transaction.

A fixed expense is a cost that arrives at the same amount on the same schedule whether or not you think about it, such as rent, a loan payment, an insurance premium or a subscription, and it changes only when you make a decision that changes it.

A grace period is a set number of days in which a payment can be made without penalty, on a credit card the days between the statement closing date and the due date during which no interest is charged on purchases, and on a loan or a bill the days after the due date before a late fee applies.

Gross income is everything you earn before anything is taken out of it, the salary or wages plus every other source of income, and it is the figure lenders, landlords and tax forms start from even though what reaches your account is smaller.

A HELOC, a home equity line of credit, is a revolving credit line secured by the equity in your home, with a limit set by a share of the home's value minus the mortgage balance, a draw period in which you borrow as needed and pay interest only on what is drawn, and a repayment period in which the balance is paid down.

A high-yield savings account is a savings account, usually at an online bank, that pays a much higher interest rate than a typical branch savings account while keeping the same deposit insurance and the same access by transfer, so it is the usual home for cash that must stay safe but should still earn something.

Home equity is the part of your home's value that is yours, what the home would sell for today minus every loan secured by it, and it grows as the mortgage balance falls and the home's value rises.

An IRA, an individual retirement account, is a retirement account you open yourself at a brokerage or bank rather than through an employer, funded from earned income up to an annual limit the IRS sets, in which the investments grow without yearly tax and, in the traditional kind, contributions may be deducted now and withdrawals are taxed in retirement.

Impulse buying is buying something on a sudden urge rather than giving the purchase your usual consideration beforehand.

An index fund is a mutual fund or ETF that holds every investment in a market index, such as the S&P 500, in the same proportions as the index, so that it earns the index's return minus a small fee instead of paying a manager to try to beat it.

Inflation is the rise in the general level of prices over time, measured as a yearly percentage, so that each dollar buys a little less each year and money that does not grow at least as fast as prices loses purchasing power.

An installment loan is a loan for a fixed amount repaid in equal scheduled payments over a set term, each payment covering that month's interest and reducing the principal, so the balance reaches zero on a known date; mortgages, auto loans, student loans and personal loans are installment loans.

An interest rate is the yearly cost of money stated as a percentage of the balance, charged by a lender on what you borrow and paid by a bank on what you deposit, and applied to the balance one month or one day at a time.

An irregular expense is a cost that does not arrive every month, either a known bill on a longer cycle such as an insurance premium or an annual renewal, or an expense with no schedule at all such as a car repair, and it is budgeted by setting aside a monthly share in advance.

Irregular income is pay that arrives in amounts or at times you cannot predict, from commission, freelance and contract work, tips, gig work, seasonal jobs or shifts that vary, so that a month's income is not known until the month is over.

A joint account is a bank account owned by two or more people together, where every owner can deposit, withdraw and see everything in it without the others' permission, and every owner is responsible for the whole balance, any overdraft and any fees.

A late fee is a one-time charge a biller adds when a payment arrives after its due date or the grace period that follows it, set by the account's terms as a flat amount or a percentage of the amount due, and charged on top of any interest the balance was already accruing.

A liability is any balance you owe to someone else, a credit card balance, a loan, a mortgage or money owed to a person, counted at what it would take to pay it off today, and the sum of your liabilities is what is subtracted from your assets to give your net worth.

Lifestyle creep is the tendency for spending to rise with income, so that a raise is absorbed by a slightly higher standard of living within a few months and the amount saved stays where it was, now a smaller share of a larger income.

Liquid net worth is the part of your net worth you could turn into cash within days without a large loss, your cash, savings and taxable investments minus the debts that would have to be paid from them, with home equity, retirement accounts and vehicles left out.

Liquidity is how readily an asset can be turned into spendable cash without a substantial loss in value.

A minimum payment is the smallest amount a credit card issuer will accept by the due date to keep the account current, set by a formula that is usually a small share of the balance plus that month's interest, so that paying only the minimum leaves most of the balance to carry interest into the next month.

A money market account is an insured bank deposit account that pays interest like a savings account and adds some of a checking account's access, usually checks or a debit card, often with a minimum balance and a rate that rises in tiers with the balance.

A mortgage is a loan used to buy a home, secured by the home itself, repaid in monthly payments of principal and interest over a term of usually 15 or 30 years, with the lender holding a claim on the property until the balance is paid.

Net worth is everything you own minus everything you owe, measured at today's values, and the direction it moves over time says whether your finances are getting stronger.

An overdraft is what happens when a payment or withdrawal takes a checking account below zero and the bank pays it anyway, leaving a negative balance you owe back, usually with a fee for each item the bank covered.

PMI, private mortgage insurance, is a monthly premium added to a conventional mortgage payment when the down payment is under 20% of the home's value, protecting the lender if the borrower defaults, and it ends once the balance falls to 80% of that value on request or to 78% automatically.

A pay period is the stretch of days an employer counts your work over before paying for it, a week, two weeks, half a month or a month, and its length sets how many paychecks a year holds and how much each one carries.

Pay yourself first is the practice of moving the month's saving and extra debt payments out of the account by automatic transfer on payday, before any bill or purchase, so that the saving is fixed by its timing and whatever remains is what the month has to spend.

A payment plan is an agreement with a biller to pay an amount owed through scheduled payments rather than all at once, under terms that set the payment amounts, dates, and any interest or fees.

A pending transaction is a card purchase your bank has authorized but the merchant has not yet settled, shown at the amount the merchant requested and already subtracted from your available balance, which becomes a posted transaction at the final amount usually within one to three business days.

In common US usage, a pension is an employer-sponsored defined-benefit retirement plan that promises retirement benefits under a formula, often based on pay and years of service.

A power of attorney for finances is a legal authorization for an agent to handle money or property matters on another person's behalf, within the limits of the document and applicable law.

Principal is the amount of money borrowed or still owed on a loan, as distinct from the interest charged on it, so that every loan payment splits into the interest for the period and the principal it retires.

A rate of return is what an investment gained or lost over a period, counting the change in its value and any income it paid, expressed as a percentage of what it was worth at the start, so that investments of different sizes and kinds can be compared on one number.

A recurring charge is any payment that leaves an account on a regular schedule at a known or predictable amount, from a subscription or a utility bill to a loan payment, and together the recurring charges are the part of a month that is spent before it begins.

Refinancing is replacing an existing loan with a new one that pays it off, usually to get a lower interest rate, a different term or a smaller payment, in exchange for closing costs that the monthly saving has to earn back before the new loan is cheaper than the old one.

A refund is money a merchant returns for all or part of a previous payment, such as after a return, cancellation, or billing correction.

A reimbursement is money paid back to someone for an expense they covered on another person's or organization's behalf.

Revolving credit is an account with a credit limit you can borrow against, repay and borrow against again, where interest is charged on whatever balance is carried from one month to the next and only a minimum payment is required, so there is no fixed payoff date; credit cards are the common example.

A Roth IRA is an individual retirement account funded with money that has already been taxed, so the investments inside grow without tax and qualified withdrawals in retirement, contributions and earnings alike, are tax-free.

The rule of 72 is a mental shortcut for compound growth that estimates the years a balance takes to double by dividing 72 by its yearly growth rate, so that money growing at 6% a year doubles in about twelve years and money growing at 9% in about eight.

A savings account is a bank deposit account for money you mean to keep rather than spend, which pays interest on the balance and is kept apart from everyday spending by having no checks or debit card and, at some banks, a limit on monthly withdrawals.

A savings goal is a specific amount of money to have saved by a specific date for a named purpose, funded by a monthly share equal to the amount still needed divided by the months left, so that the purchase is paid from a balance you built rather than borrowed.

A savings rate is the share of your income you kept over a period, computed as everything that raised your net worth, the retirement contributions, the positive cash flow and the debt principal paid, divided by take-home pay plus the retirement contributions that were deducted from it.

A secured loan is a loan backed by collateral, an asset such as a house or a car that the lender can take and sell if the loan is not repaid, which lowers the lender's risk and usually the interest rate compared with an unsecured loan for the same amount.

A security deposit is money held to secure a tenant's obligations under a rental agreement, with the balance refundable after deductions permitted by applicable law and the lease.

Self-employment tax is the US Social Security and Medicare tax generally owed on net earnings from working for yourself, separate from income tax.

Severance pay is compensation an employer provides in connection with ending employment, paid as a lump sum or through continued payments, with eligibility and payment terms varying by employer and situation.

A sinking fund is money set aside a little every month for an expense you know is coming, sized by dividing the expense by the months until it is due, so the bill is paid from the fund instead of from the month it lands in.

A statement balance is the amount owed on a credit card on the day its billing cycle closed, the figure printed on that cycle's statement, and paying it in full by the due date is what keeps the grace period and avoids interest on the purchases in the cycle.

A subscription is an agreement to pay a merchant a set amount at a regular interval, usually monthly or yearly, for continued access to a service or product, charged automatically to a stored card or account until you cancel.

A variable expense is a cost whose amount changes from month to month with your decisions, such as groceries, fuel, dining out or shopping, so it is managed with a budget amount, a pace through the month and a weekly rule rather than changed once.

Zero-based budgeting is a budgeting method that assigns every dollar of the month's income to a category before the month starts, spending, saving and debt payments alike, so that income minus everything planned equals zero and no dollar is left without a decision.

A transfer is money moved from one of your own accounts to another, a deposit to savings or a payment to your credit card, which changes where the money sits but is neither income nor spending, so it is left out of cash flow and the budget.

Unit price is a product's price divided by its quantity, expressed per ounce, pound, item, or another consistent unit so you can compare different package sizes.

Take-home pay is the part of your gross pay that actually reaches your bank account after income tax withholding, Social Security and Medicare, and deductions such as retirement contributions and health premiums have come out, and it is the figure a budget is built on.

A tax refund is the money the government returns after you file a return, because the tax withheld from your paychecks or paid in estimates during the year came to more than the tax the return computed, so it is your own money coming back late and without interest.

Tax withholding is the income tax an employer takes out of each paycheck and sends to the government on your behalf, in an amount set by the Form W-4 you gave them, so that the year's tax is paid as you earn it and the return in spring settles the difference as a refund or a bill.

Unemployment benefits are temporary payments under unemployment insurance programs to eligible workers who lose employment, with eligibility, payment amounts and duration determined by applicable rules.

Vesting is the process by which money an employer puts into your retirement account, or shares it grants you, becomes yours to keep on a schedule tied to your years of service, while everything you contribute yourself is yours from the day it goes in.

Money terms, defined.

Budgeting

Spending & cash flow

Bills & subscriptions

Saving

Debt & credit

Banking & accounts

Income & taxes

Investing

Net worth