The world of finance may seem complicated and overwhelming. Experts provide us with statistics and jargons every day that often worsen our confusion instead of providing us with relief and ease. Accordingly, it’s highly important to master the language of money, as it is the key to learning how to manage your finances well.
Robert Kiyosaki, best-selling author and financial guru asserts that learning important terms can lower your chances of making poor, uneducated decisions. By being fluent in what he calls the “words of money,” you will also avoid being fooled by misleading advertisements regarding investment and banking service packages.
Today, technology has endowed us with the power of educating ourselves in any field or industry that we desire to learn. We face no shortage of information and within a couple of clicks, we can have unlimited access to online systems. Other ways to improve your knowledge of money is by reading financial news regularly, either on traditional media or online platforms.
To help you get started on the journey of mastering the dollar language, we have rounded up several terminologies that many people have trouble understanding.
Annual Percentage Rate (APR)
This refers to the sum of fees and their necessary payments of a loan within the period of 12 months or one complete term. The APR is legally standardized to make it easier for the borrower to compare different loan offers and make decisions based on his or her capacity to pay.
Consumer Price Index (CPI)
The CPI refers to a series of numbers that represent the cost of living in a specific area. It starts at 100, and from there, the prices of staple goods increase.
Hire Purchase
A hire purchase is also called closed-end leasing or rent to own. This refers to a contract in which a buyer agrees to make a purchase by providing payment in installments or percentages, completing the expenses for a longer period of time.
Net Worth
Net worth is calculated by subtracting the total amount of your liabilities from the sum of your assets. Your assets include properties such as your house and car, as well as your bank account and investment stocks. Your liabilities pertain to the payments you owe such as mortgage balances, car loan, student loans, and credit card debt.
Wage Garnishment
This is the practice of deducting an amount from the salary of an employee to cover certain expenses. Accordingly, garnishing an individual’s wage requires obtaining a court order. Examples of instances that allow wage garnishment is when a person has to pay for child support, court expenses, and defaulted debts and loans. The garnishment ends when the total amount is paid off.
Usually, the amount allowed to be garnished must not go beyond 25% of an individual’s weekly wage. If you’re in Salt Lake City and want to prevent wage garnishments, you might need the help of an expert.
Repossession
Repossession is the legal action done by a seller that involves the retaking of a previously purchased item when a buyer is not able to meet the payment terms.
To ensure that you will be guided in learning the ropes on money terminologies, it’s recommended that you consult a professional.