Balance The amount of money that remains. The balance of your checking account is the money that is there after all deposits and withdrawals have been accounted for. The balance of a loan or a credit card balance is the amount that remains to be paid.Budget A personal plan for how you will spend a certain amount of money over a specific period of time. With a good budget you can quickly see how your money is being spent, which makes it easier to make spending adjustments in order to increase your savings.
Capital Gains Tax Tax that is calculated as a certain percentage of your profit from the sale of stocks or real estate.
Certificate of Deposit (CD) An investment in which the bank agrees to repay the original investment plus interest at a specific time in the future.
Checking Account An account that is set up for the primary purpose of paying bills. A check is written and used in place of cash. The person receiving the check can get cash for the check's value which is then deducted from your checking account.
Credit Card A plastic card that you use to pay for things instead of using cash. Once per month you receive a statement with a total cost of all the things you paid for with your credit card that month. Some credit cards require you to pay the total amount that you owe every month. Other credit cards allow you to pay a minimum amount toward the balance, but you will be charged interest each month on any unpaid balance.
Direct Deposit A system where your paycheck is deposited directly into your checking or savings account, automatically every time you get paid.
Down Payment A partial payment of the total price. If you are buying a hovercraft, for example, you may want to make a down payment of $1,000. A larger down payment means you'll need to borrow less, which in turn makes your monthly payments less.
Gross The amount of money you make before taxes and other deductions are removed.
Insurance Insurance is a contract between you and an insurance company. You agree to regularly pay a certain amount of money, and the insurance company agrees to repair or replace whatever it is that you are insuring. A home owner¹s insurance policy guarantees the replacement of your home and its contents if it is damaged or destroyed. Home owner¹s insurance is required by the Bank of Knab, for instance, when you take out a mortgage. Auto insurance works the same way and is required on most planets.
Income Tax The amount of money the government takes from your paycheck (income) as taxes. Income tax is a percentage of your income and the money is needed to run the government and pay for public goods and services like highways and national parks.
Interest Rate The amount of money a bank pays you in return for keeping your money in an account at the bank. Interest is also the amount of money a bank charges you to borrow money. Interest is expressed in percentages. For example, if you have $1,000 in your savings account and the bank pays you 6% interest, they pay you $60 every year. Similarly, if you borrow $1,000 and the bank charges 6% interest, then you will owe $1,060 when the loan is due.
Investing To put money into a savings account, certificate of deposit, business (stocks) or real estate in order to make a profit.
Knab A planet 999 light years from Earth. The very friendly inhabitants of Knab, known as Knabians, emit a foul smell and leave a slippery slime trail behind them as they move about the planet. Many things on Knab, including their system of money, work, housing, vacation and transportation are remarkably similar to Earth's.
Loan Approval The process in which the bank decides if you will receive a loan you have applied for. One important factor in being approved for a loan is if you have paid loans and bills on time in the past. This is called your credit history.
Mortgage A loan for the purchase of real estate, that is paid in monthly installments over the course of a certain amount of time, usually 10, 15, 20 or 30 years.
Net The amount of money you make after taxes and other deductions are removed.
Risk Versus Rate of Return Typically, investments that are more aggressive tend to have a higher rate of return, but carry a greater risk of losing some or all of the original investment. Investments that are more conservative tend to have a lower rate of return, but are generally more safe.
Sales Tax An additional charge, or tax, that is added to the price of something you purchase.
Savings Account A special account that is considered a safe place to store money. Banks pay you interest for keeping your money in the account. Interest is expressed in percentages. For example, if you have $100 in your savings account and the bank pays you 3% interest, they pay you $3 every year. There are many different kinds of savings accounts offering different amounts of interest depending upon how much money you have in your account.
Term of Loan The period of time in which you have to completely pay off your loan. The term of a loan is usually expressed in months (12, 24, 36 etc.) or years (1, 3, 5, 15, 30 etc.).
Transfer Funds Moving money from one account to another. If you need to pay for something with a check and there is not enough money in your checking account, you may need to transfer funds (money) from your savings account to your checking account.
Unemployment Rate The percentage of adults in a society that are not employed. For example, if a society has a population of 100 people, and 5 of them are not employed, the unemployment rate is 5%.
W-4 Form Employee's Withholding Allowance Certificate. Governments need money to pay for public goods and services like roads and schools. Most governments, including the government of Knab, get their money to pay for these things from taxes. The W-4 Form is a worksheet that tells the government how much money you are "allowing" them to "withhold" from your paycheck for taxes. If you have the government take too little from your paycheck, you'll owe money at tax time. If you instructed the government to take too much money from your paycheck, you'll get a refund.
