Expense is the cost required for something (e.g. a mortgage payment)

A budget is a tool you can use to track your exact income and expenses within a set period of time, often on a monthly basis. Managing a budget will allow you to ensure you’re living within your means.

This is a number assigned to each individual that determines their creditworthiness. Lenders use it to estimate how likely that person would be to pay back a requested loan. Scores range from 300-850, 850 being a perfect score. Higher scores will give you access to more lending opportunities at more attractive rates. We recommend shooting for a score above 720. This score is based upon your credit history and your credit report.

This report is a compilation of your entire credit history. Your credit score is determined based on the information in this report. You’re entitled to view a FREE copy of your credit report once a year at each of the three major credit bureaus. We highly recommend checking your credit report routinely for mistakes or fraud that may be damaging your score. You can report incorrect information to the bureaus to be removed from your report. Get a FREE copy of your credit report at AnnualCreditReport.com.

One common misconception is that the credit report will tell you what your credit score is. In fact, the report does not list this helpful bit of information.

A checking account is an extremely liquid type of deposit account found at most financial institutions. It’s liquid because you can easily access your money with deposits and withdrawals. Most checking accounts come with a debit card you can use to withdraw funds for purchases.

This plastic card connects directly to your checking account. You can pay with a debit card and pull funds directly from your checking account to make the purchase. They are an alternative to paying with cash, physical checks, or credit cards.

A PIN is your personal identification number. You pick your own PIN number, and it’s used to authenticate your identity for electronic transactions. It’s an extra layer of security.

This 9-digit number can be found on the bottom left portion of a check. It’s the electronic address unique to the financial institution. It identifies the specific financial institution during an electronic transaction. Also known as an American Bankers Association (ABA) transit number.

A direct deposit is an Automated Clearing House (ACH) transaction, where your payment is electronically transferred to your chosen bank account. This payment could be your paycheck. Almost all employers now offer the ability to enroll in direct deposit in lieu of taking a paper check.

ACH stands for Automatic Clearing House. It’s an electronic network used by financial institutions to make financial transfers in the U.S. The network is used for direct deposits and direct payments from bank to bank. These types of transactions could include payroll, tax refunds, consumer bills, and more.

This is the most basic type of account you can open at a financial institution. It’s an interest-bearing deposit account, meaning it will earn a small amount of interest on the money deposited in the account.

This rate shows the annual cost of interest over the principal amount of a loan. For example, if the APR on a personal loan is 8.99%, you can calculate that you would pay about 8.99% of the loan amount in interest. This number can help you compare the interest rates on loans and accounts between different financial institutions. This rate does not take into account compounding interest.

While the APR shows how much interest you’ll pay, the APY shows how much interest you’ll earn. It uses a basic calculation to estimate the annual rate of return on your money, based on the funds being in the account for a full year. It does take into account compounding interest, but not any account fees that may be present.

Interest is the fee you pay for borrowing money. When you take out a loan, you’ll not only owe the loan amount back to the issuer – but also an additional percentage of money. This additional percentage is the interest.

For example, say you take out a $10,000 loan with a 5% interest rate. You pay the loan back once a month for five years. The total amount you pay back is $11,322.74. The principal paid was $10,000 and the interest paid was $1,322.74.

Gross pay is your earnings before taxes, benefits and other payroll deductions are withheld from your paycheck.

Net pay, or take-home pay, is your earnings total after all deductions are subtracted from the gross pay.