So you’re making money, or starting a business. You might be thinking of creating a bank account for yourself, or dealing with other potential business partners. Everywhere you go, you talk about money, or hear people talk about it. But what do those financial terms really mean? How can there be so many words pertaining to the same thing? Here are some money terms to help you brush up on your vocabulary and shift your career into high gear:

1. appreciate: In financial terms, this means “to increase in value.” Something appreciates over time if it is worth more now than what it used to be before. For example, comic books, limited action figures and baseball cards are items that have the potential to appreciate over the years.
2. asset: This is stuff that you own that has value to you. For example, your computer is an asset because it is your property and you use it in your business. Same goes for your house, car, jewelry, and many more.
3. acquisition: When a company buys another company, or has enough stocks to be a major player in the business and take over, this is called acquisition. For example, Google made YouTube its acquisition for $1.65 billion in an all stock transactions.
4. balance: This refers to the remaining amount that is either left in your bank account after you have withdrawn money, or the remaining amount that you still owe someone and still have to pay.
5. bankruptcy: This is the situation of not having enough money to pay people that you owe. You have a huge debt that should be paid, but unable to do so because of lack of money. Usually when you officially declare that you are bankrupt, the government requires you to give up all your possessions and find a way to pay the people that you owe as soon as possible.
6. bond: This is a loan that you can get from a business or even the government, in exchange for a promise to pay them back with interest. In most cases, an interest rate is given as well as a date where you should pay this.
7. checking account: A bank account where you are allowed to issue checks. People use checks as another form of money. You can issue this to people if you don’t have money with you, and they can just encash it in the bank later on. You have the responsibility of making sure though that you still have funds in your bank account before you issue checks, otherwise the check will bounce and you will be questioned about it.
8. credit card: This is a plastic card that allows you to buy something and pay for it later. Whenever you buy something, they charge it to your card but your money in the bank is not lessened immediately. It’s like letting you buy something right away using a loan, hence the term “credit”, but with a promise that you will pay for it later. The bank will then send you a bill listing everything that you have previously bought, and you can pay it in your own arrangement. Just remember though that if you don’t pay your bill in full right away, you may be charged with interest.
9. debit card: This is also a plastic card that allows you to buy things, only this time your bank account is lessened once you make the purchase, hence the term “debit.” This is handy if you don’t feel comfortable carrying a lot of cash with you. You can just give your card and they will charge the amount there. Think of it as an electronic wallet. As always, like the credit card, make sure that the bank account tied with your debit card has enough money in them else your card will be useless.
10. depreciate: The opposite of appreciate, this means “to decrease in value.” A used car can depreciate over time if you don’t take care of it. Same goes with rare toys that you have taken out of the box and played with, because it loses it’s mint condition.
11. interest: This is a percentage that the bank pays you in exchange for letting them hold on to your money. Usually if you keep your money in your bank account for long periods of time without withdrawing from it, you tend to get a higher interest.
12. liability: This is the amount you owe to people who have lent you money, for example, car loans, house loans, educational loans, etc.
13. liquidity: This is the ability to be able to convert your assets into cash quickly without losing too much value or money over it. For some businesses it’s important that they have some assets that can be easily liquidated in case of emergencies.
14. net worth: This is how much your business is worth. This is usually computed by subtracting the total amount of your liabilities from the total amount of your assets.
15. savings account: A savings bank account is where you can put your money for safekeeping. While it is there, your money earns interest at a certain rate.

Do you want to know the meaning of more financial terms? Let us know in the comments!

About Steve: I'm 18 years old and my goal is to one day become a millionaire! I’m really into business and entrepreneurship. I love being independent and having my own money so I'm always finding ways to earn more. In between school and homework, I write articles and maintain pages on facebook, myspace, twitter and youtube for TMMI! Continue reading here.

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