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Glossary
Money words, explained
Finance loves its jargon. Here are the money words you'll actually bump into, in plain English — no lectures, no showing off. Skim it, or search the page for the one that's bugging you.
- Budget
- A plan for your money — deciding where it goes before it disappears. Not a punishment, just a plan.
- Net income (take-home pay)
- The money that actually lands in your account after tax and deductions. This is the number to budget with.
- Gross income
- Your pay before tax and deductions. It looks bigger than your take-home pay — budget with net, not gross.
- Fixed costs
- Bills that stay roughly the same each month — rent, phone, subscriptions. Easy to predict, easy to plan around.
- Variable costs
- Spending that changes month to month — groceries, fuel, nights out. This is usually where a budget has the most give.
- Discretionary spending
- The nice-to-haves you choose to spend on — eating out, hobbies, treats. Also called your 'wants'.
- Disposable income
- What's left after your essential bills are paid — the money you actually get to decide about.
- Emergency fund
- A small pot of savings set aside for surprises — a broken phone, a gap between jobs. Aim for €500 first, then a month of expenses.
- Sinking fund
- Money you save a little at a time for a known future cost — Christmas, insurance, a holiday — so it never blows up your month.
- Savings rate
- The share of your take-home pay you save. Even a small rate counts — saving something always beats saving nothing.
- Interest
- The cost of borrowing money (on a loan or card), or the reward for saving it (in a savings account). It works for you when you save and against you when you borrow.
- APR
- Annual Percentage Rate — the yearly cost of borrowing, shown as a percentage. Higher APR means more expensive debt.
- Principal
- The original amount you borrowed (or saved), before any interest is added on top.
- Minimum payment
- The smallest amount you're required to pay on a debt each month. Paying only the minimum keeps you in debt longer — pay more when you can.
- Compound interest
- Interest earned on your interest, not just your original amount. It quietly snowballs — great for savings, painful for debt.
- Overdraft
- Spending more than you have in your account, so the balance goes negative. Banks usually charge for it, so it's best avoided.
- Direct debit / standing order
- Automatic payments from your account — a direct debit lets a company pull a bill; a standing order sends a fixed amount you set (handy for automating savings).
- Good debt vs bad debt
- A rough idea: 'good' debt buys something lasting at a low cost (like a sensible mortgage); 'bad' debt is high-interest borrowing for things that don't last. Neither is a hard rule — the cost is what matters.
- Credit score
- A number lenders use to judge how reliably you repay. Paying bills on time and not maxing out cards helps it over time.
Learn by doing
The words make sense fastest when you use them. Start a simple, private budget — no bank login, no jargon.
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