Welcome to the MoneyOpes financial dictionary. Brief definitions of financial terms to assist understanding. And links to articles and tools so you can learn and take action.
We’ve organised the dictionary from A to Z so you can jump straight to the letter you need, or simply browse to discover new concepts.
A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
A
Asset
An asset is a resource with economic value that a person, company, or country owns or controls with the expectation of future benefit. Common examples include cash, property, investments, or equipment.
→ Learn more: Asset (full guide)
Annual Percentage Rate (APR)
The Annual Percentage Rate (APR) is the yearly cost of borrowing money, expressed as a percentage of the loan amount. Unlike a simple interest rate, APR includes both the interest charged and certain lender fees. This makes it a standardized way to compare different loan offers, credit cards, and mortgages.
→ Learn more: Annual Percentage Rate (APR) (full guide)
B
Balance Sheet
A balance sheet is a financial statement that provides a snapshot of a company’s assets, liabilities, and shareholders’ equity at a specific point in time.
Bonds
You lend money to a company or government. They pay interest and return the face value at maturity. Risk changes with the issuer, and prices can move if sold early.
Budget
A plan for how you will allocate your income toward expenses, savings, and debt repayment.
For a deeper explanation, read our related article Master Your Budget – Easy Steps – Budgeting & Savings Guide.
C
Capital Allocation
Capital allocation is how management decides to use the company’s money. Choices include reinvesting, paying dividends, or reducing debt. Good capital allocation supports long term value.
Cash Flow
The movement of money in and out of your accounts, showing whether you have enough income to cover expenses and savings.
Certificate of Deposit (CD)
A bank account that pays fixed interest for a set time. CDs often return more than savings accounts, but funds stay locked until maturity.
Put this definition into practice with our CD Calculator.
Closing Costs
The fees and charges you pay at the final stage of buying a property, including legal, lender, and government costs.
Competitive Advantage
A competitive advantage is any feature that helps a company outperform rivals. For example, it may be lower costs or a trusted brand. This advantage supports stronger results over time.
Compound Interest
Interest calculated not only on the original amount of money but also on the interest that has already been added, allowing savings or debts to grow faster over time.
→ Learn more: Compound Interest (full guide)
Credit History
Credit history is your record of borrowing and repayment over time. It includes accounts opened, payment patterns, and any defaults. As a result, a longer and positive history can improve your score.
Learn more in our related article What Is a Credit Score.
Credit Utilization
Credit utilization is the percentage of your available credit that you are using. For example, if your limit is $10,000 and your balance is $2,000, your utilization rate is 20 percent. Therefore, lower utilization shows stronger credit management.
Learn more in our related article How to Improve Your Credit Score and Get a Home Loan Deal. The article discusses strategies to manage credit utilization.
D
Discretionary Income
The amount of income left after paying taxes and essential living expenses, available for savings or non‑essential spending.
Debt to Equity
Debt to equity compares a company’s debt to its shareholder equity. It helps you understand how much leverage the company uses. Lower levels often mean more flexibility during tough periods.
Debt-to-Income Ratio (DTI)
A measure comparing your monthly debt payments to your gross monthly income. Lenders use it to test affordability.
Default
A default occurs when you fail to repay a debt as agreed. Consequently, defaults can lower your credit score and make borrowing more expensive.
Dividends
Dividends are payments that companies make to shareholders from their profits. They are usually paid in cash, but sometimes in additional shares. Dividends reward investors for holding stock and can provide steady income.
Example: A company that earns consistent profits may pay quarterly dividends to shareholders.
Derivatives
Contracts that take value from another asset, such as a stock or index. Professionals use them to manage risk or speculate.
Down Payment
The upfront cash you pay toward the purchase price of a property, usually expressed as a percentage of the total price.
E
Emergency Fund
Money set aside for unexpected expenses like car repairs or medical bills.
Learn more and explore practical examples in our Emergency Fund Calculator and Guide.
Escrow
A financial arrangement where a neutral third party holds funds or documents until all conditions of a property transaction are met.
Equity
The portion of a property you truly own, calculated as the property’s market value minus any outstanding mortgage balance.
F
Fixed Expenses
Costs that stay the same each month, like rent or mortgage payments.
Fixed vs Variable Rate
A fixed rate stays the same for the loan term, while a variable rate can change with market conditions.
Free Cash Flow
Free cash flow is the cash left after a company pays for operations and investments. It shows how much money the business can use for growth or returns to shareholders. As a result, it is a key measure of financial strength.
Funds
Managed products that pool investments. ETFs track an index and trade daily, while mutual funds are actively managed and priced at day’s end.
G
Growth Rate
Growth rate is the percentage your savings may increase each year. It shows how interest or returns add to your balance over time. A higher growth rate means faster savings growth, while a lower rate means slower progress.
Growth rate is the yearly percentage increase in your savings. It reflects how interest or investment returns add to your money.
A higher growth rate reduces the amount you need to save each week or month. A lower growth rate means you must save more to reach the same goal.
Yes. Growth rates can change with interest rates or market returns. The calculator lets you test different rates to see how they affect your savings plan.
I
Inflation
When prices rise over time, reducing purchasing power.
Inflation is described as measuring how much more expensive a set of goods and services has become over a certain period, usually a year. [1]
Learn more about this topic in What is Inflation.
M
Market Share
Market share is the portion of total industry sales held by a company. Rising market share often shows competitive strength. It also suggests that customers prefer the company over rivals.
Moat
A moat is the durable advantage that protects a company from competitors. It can come from brand strength, patents, distribution networks, or customer loyalty. A strong moat helps a business keep profits steady and grow over time.
Example: Coca Cola has a wide moat. Its brand is recognized worldwide, its distribution system reaches nearly every market, and customers often choose it over alternatives. This edge supports long term success.
Learn more in our related article Wide Moat Companies. How They Win Over Time and How to Spot Them.
Mortgage
A mortgage is a loan used to buy a home. Lenders review your credit score before offering terms. Therefore, a higher score usually means lower interest rates and better conditions.
Learn more and explore practical examples in How to Pay Off Your Mortgage Faster – 5 Easy Ways.
O
Options
A contract that gives the right to buy or sell an asset at a set price by a set time. Options are one type of derivative.
P
Pay Yourself First
Save a set amount before paying other expenses.
Pre-Approval
A lender’s conditional agreement to provide you with a mortgage up to a certain amount, based on your financial situation.
P/E Ratio (Price to Earnings Ratio)
The P/E ratio shows how much investors are willing to pay for each dollar of a company’s earnings. It is calculated by dividing the stock price by earnings per share. A high P/E ratio can signal growth expectations, while a low P/E ratio may suggest limited prospects or undervaluation.
Example: If a company’s stock trades at $40 and its earnings per share are $4, the P/E ratio is 10.
Learn more and explore practical examples in Ways to Value a Stock: Main Approaches, Value Investing, and a Coca‑Cola Case Study.
R
REITs
Real estate investment trusts (REITs) are companies that own real estate. REITs invest in properties and pay regular distributions from rental income. They trade on stock exchanges, making them liquid and easy to buy or sell.
Revenue CAGR
Revenue CAGR is the average yearly growth rate of revenue over a set period. It smooths out short term swings and shows long term direction. This helps you judge whether the business is expanding.
ROIC
ROIC is Return on Invested Capital. It measures how effectively a company uses its capital to generate profit. Therefore, it helps you compare performance across companies.
S
Savings
Money you set aside for future needs, goals, or emergencies instead of spending it immediately.
Learn more and explore practical examples in Smart Places to Keep Your Hard Earned Savings.
Shares (Stocks)
Buying shares means owning part of a company. Investors gain when prices rise or dividends are paid. Shares carry higher risk but can grow wealth over time.
Learn more and explore practical examples in Investing in Stocks: A Beginner’s Guide to How Stocks Work.
Sinking Fund
Savings built gradually for planned future expenses, such as holidays or insurance.
Surplus
When your income exceeds your expenses in a given period.
T
Title Search
A legal check of property records to confirm ownership and uncover any claims or liens before purchase.
Learn more in our related article Steps to Buying a House: Complete Guide.
V
Variable Expenses
Costs that change monthly, such as groceries or utilities.
Z
Zero‑Based Budget
Every dollar is assigned a purpose until nothing is left unallocated.
Learn more and other budgeting methods in explore practical examples in Master Your Budget – Easy Steps – Budgeting & Savings Guide.
References and Further Reading
[1] Consumer Financial Protection Bureau. “Inflation: Prices on the Rise”
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