Talk money to me

Talk money to me
11 May 2021    Donnay Torr    0 comments
We keep on hearing these weird finance words… But what does it all mean?! Discover some of the basic terms that money savvy people need to know.

Ready for ALL THE WORDS? 

Here ya go!

Everyday

  • Budget – A plan to keep track of your money
  • Income – Money that you earn (pocket money, wages, tutoring work, interest earned, salary, lemonade stand…)
 
  • Expenses – What you spend your money on (food, bills, clothes, Netflix…)
  • Living below your means – you have money left over at the end of the week. A good thing!
  • Living above your means – you’ve spent more than you’ve earned in a week. Not so good…

Banking

  • Savings account – A bank account that pays interest to the account holder. It’s not designed to make purchases or payments.
  • Transactional account – Everyday deposit account for purchases and payments.
  • Account-keeping/bank fees: ongoing fees the bank charges to create and maintain your bank account. Look for banks with the lowest or NO fees – especially for youth bank accounts!
  • Interest:
    • Something you pay when someone lends you money (like the bank),
    • Something you earn when you lend money to someone else, or keep your money in a bank account that pays you interest.
    • Interest is the reason why you should be super-fast to pay off debts (student loan, car loan, house mortgage, your friend), and be super slow to spend any savings or invested money.
  • Credit – Credit lets you buy something without having to pay for it right away. Use it very wisely.
  • Credit card – A card that borrows money from a credit card company to pay for something you want, whether you have actual money in your transactional account or not. Only use a credit card if you can afford to pay it off right away, or the credit card company will charge you extra money (interest).
  • Debit card – Linked to your transactional account, and takes money directly from it for purchases and payments. Which means it can only take what’s actually in there! Also used for cash withdrawals from ATMs.
  • EFTPOS (Electronic Funds Transfer at Point of Sale) – A payment system where you use your debit card to make payment for goods and services, or to withdraw cash. That tap-and-go card thing!
  • Loan – Money that you borrow from a bank, a friend, a credit union or an online money lender, and which has to be paid back with interest. Can include student loans, car loans and home loans (taking out a mortgage), or short-term loans for urgent expenses.
  • Debt – Money that you owe: loans, credit card debt, home mortgage, AfterPay.

Growing your money

  • Saving – Putting some money aside for future use
  • Compound Interest – Compound interest means interest is calculated on the entire balance of your savings account, not just the initial amount you deposited. This means that every year, if you don’t withdraw your balance, you’ll be earning more interest because the balance of the account is getting bigger.
  • Investing – Something (like stocks or an investment property) you spend money on, which you hope will earn you even more money (profit) along the line (either through compound interest, or making a profit when you sell shares or your property). Choose what you invest in carefully, because there is always some risk involved.
  • Stocks (Shares) – A piece of a company that you can “own” as part of your investment plan. Every stock has a price and that price can go up or down, depending on what's happening at the company.
  • Stock Market – Where people buy and sell (trade) their stocks. Can be physical or online.
  • Superannuation – A type of “savings” account for your retirement, offered by your employer. Your employer pays a percentage of your salary into your Super every year, where it gets invested and grows for future financial security.

Taaaaaaaaax!

  • Tax – Payments taken out of your income (salary, wages, interest earned), which go to the government for the work that it does, such as improving schools and fixing roads. That’s why you should use your vote wisely – the government guys are spending YOUR money!
  • TFN – Tax File Number – you need this once you start earning money
  • Tax deductions – Claims you can make to pay less tax, such as charitable donations, travel costs or important work gear.

Payday

  • Gross salary – Your total salary package, inclusive of super and extras, pre-tax.
  • Net salary – Your take-home pay after tax and deductions, but before you start paying your bills…
  • Pay slip – a legal document that shows how many hours you’ve worked, how much you’ve been paid, how much leave is owed to you, how much super your employee has paid on your behalf, how much tax you’ve paid… Working life FTW! Learn how to read a payslip here.

Find out more about how to do your taxes here:

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Main photo: Nigel Tadyanehondo on Unsplash.
Gifs sourced from giphy.com.

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