HFK Glossary

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KEY:

🇨🇦 : Canadian

🇫🇷 : French

🇬🇧 : UK

🇦🇺 : Australian

Any definition without a flag is general/USA. 

401(k): A retirement investing account offered by your employer

403(b): The public sector’s equivalent to a 401(k).

APY: Annual percentage yield is the rate of return for your investment, which also includes your expected earning in compound interest.

Bail bond: Many defendants cannot afford to pay bail, which allows them to not have to sit in jail as they await their trial. So, they seek the help of a bail bondsman who helps them pay bail but then charges them a fee of usually 10-20% of  the initial bond, which is used as collateral so that the defendant shows up to trial. 

Balance transfer: Taking your debt from one place (typically a credit card) and moving it to another play that oftentime has a lower interest rate.

Bond: The debt of a company or government. When you buy a bond, you are giving a company/government a loan and earning money on the interest.

Brokerage: A brokerage is a company through which you can make investments in assets and funds. For example, TD Ameritrade, Charles Schwab, Fidelity, Vanguard, and Robinhood are all examples of brokerages. 

Brokerage account: An investing account at a brokerage firm. Brokerage firms buy and sell stocks, bonds, options, and other financial products on behalf of clients.

Budgeting: Instead of feeling guilt about spending money, it allows you to focus on spending money on the things you love, without explanation or justification. It’s a permission slip. It also helps you avoid the guilt of not taking care of yourself financially. It makes sure that you’re factoring in your financial well-being, in addition to your wants.

Cash bail: If you get arrested, you can be held in jail until your court date. Studies show that judges place higher bail amounts on people of color, which means the whole system relies on racism –– from the arrests and the policing of communities to the economic state of the communities most affected. The alternative is sitting in jail for six months or sometimes years awaiting trial.

Certificate of deposit: A savings account with a higher interest rate, but in exchange, you cannot access your money for a certain period of time.

CFPB: The Consumer Financial Protection Bureau makes sure that banks, lenders, and financial institutions are playing fair. 

Credit history: The age of your oldest line of credit.

Credit score: Think of it as your adult GPA.

Credit utilization rate: The percentage of credit you’re using.

Debt: Something that is owed, usually money.

Debt consolidation: Taking multiple debts and putting them together with only one interest rate (often a lower rate than you were paying before).

Direct deposit: A payment made electronically from one person to another.

Discretionary money: Money you can spend on things you want, not on things you have to buy. This is your “fun money.” 

DIY investing: You’re the one choosing the stocks and bonds you’re buying.

Emergency fund: Three to six months of living expenses saved, in a high-yield savings account. 

Employee match: If you contribute a percentage of your salary to your retirement account, your workplace will match it (ex: a 3% match means if you contribute 3% of your salary, your employer will as well).

Expenses: Everything that costs you money in order to eat, sleep, and live.

Financial advisor: A money manager or a broker who provides services to a client. If you’re reading this book, you probably don’t need one yet (PLEASE make sure they are a fiduciary.)

Financial Feminism: The act of embracing the power you already possess in order to help yourself — and those around them — reach financial equality.

Fiduciary: A type of financial advisor that is legally bound to make decisions in your best interest.

Form W-2: A type of tax form that you fill out when becoming an employee. It helps the IRS calculate how much of your income should be taxed. Come tax time, it will determine how much you’ve made and how much you’ve paid in tax.

Form W-4: You’ll most-likely receive this form at the start of a new job. It helps determine how much tax you would like your employer to withhold from your paycheck. 

Form 1040: A form that individual taxpayers fill out in order for the IRS to calculate the amount of taxes they’re owed. It’s also
where you set your filing status and claim and deductions and will determine what your tax refund may be.

From 1099- MISC: If you paid anyone over $600 for the year, whether it be for rent, cash and rewards, royalties or anything else on this list, you need to send them this form to fill out before filing your taxes. 

🇨🇦 HISA: The Canadian version of a HYSA.

HYSA: A savings account with a higher than average interest rate that helps your savings stay up to date with inflation.

🇫🇷 French HYSA: A HYSA for French residents. We recommend Cashbee, you can open a FREE account in 5 minutes and instantly earn 3% interest for 3 months (for up to 75K euros), followed by 0.7% thereafter. Download the app to open an account! 

Index fund: A mutual fund or an ETF (exchange-traded fund) is designed to track a particular financial market index –– for example, the S&P 500 (The S&P 500 is simply the 500 biggest companies on the stock market.)

Inflation rate: The rate in which the price of goods in services in the economy is increasing.

Interest rate: The percentage of money that accrues and you are responsible for paying on top of the money that was lent to you.

Interest: The money that accrues on top of the money that was lent to you.

IRA: individual retirement account, meaning it’s not tied to your employer. The annual maximum contribution is usually $6,000.

Line of credit: The amount of credit you have available to use.

Market rate: Market research tells you what you should be getting paid relative to other people in your industry, with the same experience level.

Overdraft fees: When you withdraw more money that you have in your account, you receive an overdraft fee.

Payday loans: Payday loans are a short-term loan, designed (in theory!!) to cover the individual until their next payday, with insanely high interest rates.

Pension: A guaranteed regular monthly payment from your employer that begins paying out when you retire. In order to become eligible for the full pension amount, you usually have to work a set number of years.

🇨🇦Canadian Pension: Our neighbor to the north is known for its social programs, and their pension system is no different. Canada’s pension program is completely funded through the government and available to citizens who have lived there for at least ten years.

🇬🇧UK Pension: The UK offers a mandatory pension plan for its citizens. Like other countries, you can also opt for a private pension plan in addition to the mandatory pension plan. These are meant to be additional sources for retirement income.

🇫🇷 French Pension: The French system of retirement is built around pensions. These are compulsory payments (AKA non-optional), but there are additional private pensions you can take out if you’d like to contribute beyond your requirements.

🇦🇺 Australian Pension: Like France, Australia has a social pension program for its citizens called Age Pension. Also, like France, you must meet a 10-year citizen requirement.

Important note for US expats –– you need to work in France for ten years to be able to take advantage of their pensions.

Personal loan: Borrowed money that you use for personal reasons, you receive one based on your credit history and income.

Pink tax: A term used to describe the fact that items marketed toward women are often more expensive than the same items marketed toward men.

Pledging shares: Borrowing against their company’s stock to avoid taxes.

Portfolio: A portfolio is the collection of investments that you have made.

Principal: The original sum of money you borrow on a loan.

Profit share: A system in which employees of a company receive a direct share of the profits.

PTO: A work benefit where you take time off but still get paid for the time worked.

RoR: Rate of return is how much your investments have either lost or gained over a specific period of time.

Retirement account: Investment accounts that are specifically for retirement. They are tax-advantaged.

Retirement investing: Strategically investing with the goal of being able to retire and live off of the money you invested.

ROI: Return on investment is a way to make sure your investments are doing what they’re supposed to do — earn you money! 

Robo advis
or: A company who invests for you, but they take a percentage of the money (usually .25-.5% on top of any fund-specific fees). 

Roth IRA: A Roth IRA is a tax-advantaged retirement account that is not tied to your employer, meaning just about anyone can open one. That’s exactly what the “I” in IRA stands for— Individual Retirement Account. You can open a Roth IRA at any age as long as you have a job and unlike a traditional IRA, there are no required minimum distributions.You also pay the taxes now and receive the tax benefits later.

Savings account: A type of bank account that usually accrues some sort of interest.

SEP IRA: Simplified employee pension is another kind of IRA. Like a traditional IRA, you pay the taxes you owe when you withdraw money (i.e. at retirement age). It’s designed for solopreneurs or companies with a few people. Maximum contribution to a SEP is $56,000/year limit, or up to 25% of your income (whichever comes first).

Simple interest: Based on the principal amount of a loan or the first deposit in a savings account.

Solo 401(k): Similar to the employer-sponsored 401(k) plan, except you’re your own sponsor!

Stock options: When a company gives you the chance to invest in that company at a discounted rate or a fixed price. 

Stock: Slivers of companies, so owning a stock means you’re a part-owner in a company.

🇨🇦 TFSA: The Canadian version of a Roth IRA is a TFSA (tax-free savings account). Like a Roth IRA, a TFSA is tax-advantaged, and as long as you are over the age of 18 and have an SIN, you can open one! TFSAs have yearly contribution limits –– currently, it is $6000 a year.

Traditional IRA: Like the Roth IRA, this is an individual retirement account, meaning it’s not tied to an employer. You won’t pay any taxes on this money until you withdraw it at retirement, so you receive benefits now rather than later.  

Unbanked: An individual who does not have a bank account.

Underbanked: People who live in areas where financial services are not easily accessible.

Value-based spending: The act of spending a majority of your discretionary money on what brings you true value and joy.

401(k): An investment account linked to your employer can give you tax advantages. Many 401(k)s allow you to set a certain amount of money that is automatically deducted from each paycheck and put into your investment account. This money is typically pre-tax up to an annual dollar limit (the specific limit depends on the type of 401(k) you have). Some employers offer what’s called a match, where they will match every dollar you invest up to a certain dollar amount or percentage of your salary. This is free money! If your employer has a match, take advantage of it!