Household money and budgeting

Words for planning a household budget and saving ahead for the bills you can see coming.

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50/30/20 ruleA budgeting guideline that splits after-tax income into 50% for needs, 30% for wants and 20% for savings and paying down debt.

A

Account balanceThe money in a bank account once posted deposits and payments are counted, also called the ledger balance; pending card purchases aren't subtracted yet.

AllowanceA set amount of money a child gets on a regular schedule to manage, often with an agreement about what it has to cover.

APYA yearly rate showing the total interest a deposit account pays, counting how often interest compounds, as defined by federal Truth in Savings rules.

AssetsThings you own that are worth money, such as cash, investments, a home or a car. Your assets minus your debts is your net worth.

ATM feeA charge for using an ATM, which can come from the machine's owner, from your own bank for using a machine outside its network, or from both.

Available balanceThe money in a bank account you can use right now: the posted balance minus pending card purchases and any deposit the bank is still holding.

B

Bank reconciliationChecking your own record of a bank account against the bank's statement, line by line, and explaining every difference until the two balances agree.

Barista FIREA FIRE style where you leave full-time work once savings cover part of your costs, and part-time work or a side business pays for the rest.

Bill calendarA calendar that shows each bill on the day it's due, often next to your paydays, so you can see which paycheck has to cover which bill.

Bucket budgetingA budgeting method that splits your money into separate labeled buckets, such as bills, spending and savings goals, and uses each one only for its job.

BudgetA plan for a set period, usually a month, that lists the money you expect to receive and how you'll spend or save it.

Budget categoryA group of similar costs, such as housing, groceries or transportation, that a budget plans and tracks together with its own amount.

Budget reviewA regular check of what you actually earned and spent against your budget, followed by changes to the plan where it no longer fits real life.

Budget varianceThe gap between what a budget planned and what actually happened, in dollars and as a percent of the plan, marked favorable or unfavorable.

Buy now pay laterA short-term loan at checkout that splits a purchase into a few payments, most often four interest-free installments with the first due when you buy.

C

Cash advance(1) Cash borrowed against a credit card's limit, which usually costs a fee plus interest from day one; (2) a small advance on your pay from an app.

Cash flowThe money coming in and going out over a period; positive cash flow means more came in than went out, and negative means the reverse.

Cash stuffingA budgeting habit of withdrawing spending money as cash and dividing it into labeled envelopes or binder pockets, one for each category.

CashbackMoney a card or program pays back as a percentage of what you spend, usually as a statement credit, a deposit or a check.

Cashier's checkA check a bank issues and sells, drawn on the bank's own funds, so the bank itself is responsible for paying it.

Certificate of depositA deposit you agree to leave at a bank or credit union for a set term, until its maturity date, usually with a penalty for taking money out early.

Checking accountA bank or credit union account for everyday money going in and out, used by debit card, checks, transfers and direct deposit.

Chore moneyMoney a child earns for jobs around the house, often paid for extra work beyond the chores everyone in the family is expected to do.

Christmas club accountA savings account you pay into on a schedule through the year, so the balance is ready for holiday shopping when the bank or credit union pays it out.

Coast FIREA FIRE style where you save enough early that, left to grow, your investments could reach a retirement goal later without large new contributions.

Compound interestInterest paid on your original amount and on the interest it has already earned, so each year's interest is a little bigger than the last.

Cost of livingWhat it costs to keep a certain standard of living, such as housing, food and transportation, in a given place at a given time.

Cost of living adjustmentAn increase in pay or benefits meant to keep up with rising prices, such as Social Security's yearly COLA, which is based on the CPI-W.

Coupon stackingUsing more than one discount on the same item in one purchase, such as a manufacturer coupon plus a store coupon, where the store's policy allows it.

Credit unionA not-for-profit financial cooperative owned by its members, offering accounts and loans to people within the field of membership its charter sets.

D

Daily spending limitThe most a bank lets you spend with a debit card, or withdraw at an ATM, in one day; the purchase and ATM limits are often set separately.

Digital walletAn app, such as Apple Pay or Google Wallet, that stores your payment cards on your phone so you can pay by tapping it or choosing a card at checkout.

Direct depositA payment, such as a paycheck or government benefit, sent electronically straight into your bank or credit union account instead of as a paper check.

Discretionary spendingMoney spent on things you want rather than need, like eating out, entertainment and travel. In government, the spending Congress sets each year.

Dual income householdA household where two adults, usually a couple, both earn income from work, so the budget runs on two paychecks.

E

Emergency fundMoney set aside only for unplanned costs, like a car repair, a medical bill or a lost paycheck, kept where you can reach it quickly.

Envelope budgetingA budgeting method that gives each spending category its own envelope of money, and spending in a category stops when its envelope is empty.

Expense trackingWriting down every purchase and bill as it happens, by category, so you can see where your money actually goes and compare it with your budget.

F

Family budget meetingA planned, regular sit-down where the people who share a household's money look at the budget together, make decisions and agree who does what next.

Financial anxietyOngoing worry or unease about money, your bills or how you handle your finances, sometimes with physical signs such as lost sleep.

Financial goalsSpecific targets for your money, such as an emergency fund, paying off a card or a down payment, each with an amount and a date.

Financial independenceHaving enough savings, investments or other income to cover your living costs without needing a paycheck from a job.

Financial infidelityKeeping money secrets from a partner you share finances with, such as hiding purchases, debt, income or a separate account.

Financial literacy for kidsThe money skills, habits and knowledge children build over time, from waiting for something they want to budgeting, saving and weighing choices.

FIRE movementA personal finance approach, short for financial independence, retire early, built on saving a large share of income so that work becomes optional early.

Fixed expensesCosts that stay about the same every month, such as rent, a car payment or an insurance premium, usually due on a set date.

Foreign transaction feeA fee a card provider charges, usually a percentage of the transaction, when you use the card in another country or pay in a foreign currency.

Frugal livingA way of living that spends carefully and avoids waste, so more of your money goes to the things you value most.

G

Gift budgetA spending plan that sets how much you'll spend on gifts, person by person or occasion by occasion, for a season or a whole year.

Gross incomeThe full amount you earn before taxes and other deductions come out. For federal taxes, it's all income you receive unless a law exempts it.

H

High-yield savings accountA savings account paying a variable interest rate that's generally higher than a traditional savings account's, often offered by online banks.

Household bill splitDividing a household's shared bills, such as rent, utilities and internet, among the people who live there, and settling up who owes whom.

Household incomeThe combined income of everyone in a household over a year; the Census Bureau counts every member age 15 and older, before taxes.

I

Illiquid assetsThings you own that can't be turned into cash quickly without a wait, a cost or a lower price, such as a home, other real estate or collectibles.

Impulse spendingBuying something on the spur of the moment, without planning for it or checking it against your budget.

InflationA general rise in the prices of goods and services over time, so the same amount of money buys less than it did before.

Irregular income budgetingPlanning spending and saving when your pay changes from month to month, such as freelance, commission or seasonal income, around your lean and average months.

J

Joint accountA bank or credit union account owned by two or more people, each of whom can usually deposit, withdraw, move money or close it.

L

Late feeA charge added when a payment arrives after its due date, set by the card agreement, lease or contract and limited by federal or state rules.

LayawayA store payment plan that holds an item for you while you pay for it in installments; you take it home only after it's paid in full.

LiabilitiesDebts and other money you owe, such as a mortgage, a car loan or a credit card balance. Your assets minus your liabilities is your net worth.

Lifestyle creepWhen spending rises along with income, so a raise or a new job leads to a bigger lifestyle but little or no extra saving.

M

Minimum balanceThe amount a bank requires you to keep in an account to open it, avoid a monthly fee or earn the stated interest rate, as set out in its disclosure.

Money market accountA bank or credit union deposit similar to savings that may pay a higher, tiered rate for bigger balances and often allows checks or a debit card.

Money mindsetThe beliefs and attitudes about money you carry, many of them learned in childhood, that shape how you spend, save and talk about it.

Money orderA prepaid paper payment for a set amount, bought up front and made out to a named payee; the U.S. Postal Service sells domestic ones up to $1,000.

Money scriptA deeply held and often unnoticed belief about money, usually learned in childhood, that shapes how you spend, save and manage money as an adult.

Monthly maintenance feeA charge a bank or credit union takes each month for keeping a checking, savings or money market account open, often waived if you meet set conditions.

N

Needs vs wantsThe split between costs you must pay to live, work and protect what you have (needs) and extras that would be nice to have (wants).

Net incomeWhat's left after everything is taken out: on a paycheck, pay after taxes and deductions; for a business, profit after all expenses and taxes.

Net worthWhat you own minus what you owe: the value of your savings, investments, home and other assets, less your mortgage, loans and card balances.

No-spend challengeA set stretch of time, often a month, when you spend only on essentials like housing, groceries, bills and transportation, and cut everything else.

No-spend dayA day when you spend nothing beyond essentials and bills already scheduled, often picked as one day a week to build the habit.

O

Opportunity costThe value of the next-best option you give up when you make a choice, whether the thing given up is money, time or something else.

OverdraftWhen a payment is bigger than your checking balance and the bank pays it anyway, leaving a negative balance you owe back, usually plus a fee.

Overdraft feeThe flat charge a bank adds each time it pays a transaction your checking account couldn't cover, on top of the negative balance you repay.

Overdraft protectionA bank service that covers a checking shortfall, either by moving money from a linked account or by paying the item and charging an overdraft fee.

P

Passive incomeIncome that keeps coming in without much ongoing work, like rent; for taxes, the IRS limits it to rentals and businesses you don't materially take part in.

Pay frequencyHow often an employer pays you, usually weekly, every two weeks, twice a month or monthly, which sets how many paychecks you get in a year.

Pay yourself firstMoving a set amount into savings as soon as you're paid, before bills or spending, so saving comes first instead of from what's left.

Paycheck budgetingPlanning money one paycheck at a time, so each bill is paid from the paycheck that arrives before it's due and the rest is spending money.

Paycheck to paycheckSpending all of one paycheck before the next arrives, so there's little or nothing left over in between.

Payday loanA small, short-term, high-cost loan, generally $500 or less, that's usually due in one payment on your next payday.

Peer-to-peer paymentMoney sent directly from one person to another through a payment app or a bank's app, such as Zelle, Venmo or Cash App.

Pending transactionA card purchase or other payment the bank has approved but that hasn't settled yet; it lowers your available balance before it reaches your account balance.

Personal balance sheetA one-page list of everything you own and everything you owe on a given date, with your net worth as the difference between the two.

Price anchoringWhen the first price you see, such as a crossed-out original or a pricey option beside the one you want, sets the yardstick for judging the next one.

Price matchingA store policy of lowering its price to match a lower price for the identical item, found at a competitor or at the store itself.

Proportional bill splitSplitting shared bills in proportion to each person's income, so someone earning 60% of the combined pay covers 60% of the shared costs.

Purchasing powerHow much a unit of money, such as one dollar, can buy. When prices rise faster than your money grows, its purchasing power falls.

R

Rainy day fundSavings for unplanned costs. Some banks mean a smaller cushion for minor surprises; the Federal Reserve's survey uses it as another name for emergency savings.

Real incomeIncome adjusted for inflation, so it measures what your pay can buy. The dollar amount before that adjustment is called nominal income.

RebateMoney paid back to you after you've paid full price, such as a mail-in rebate from a store or manufacturer; a return of part of a payment.

Rent-to-ownAn agreement to rent an item such as furniture or a TV for weekly or monthly payments, with the option to own it after paying for the full term.

Reverse budgetingA budget that moves savings out first on payday and lets bills and everyday spending share whatever is left, without a limit for each category.

Rollover budgetA budget where money left unspent in a category carries into the same category next month, instead of the category resetting to its usual amount.

S

Safe-to-spendThe money left for everyday spending before your next payday, after upcoming bills, subscriptions, card payments and planned savings are set aside.

Savings accountA bank or credit union account for money you're setting aside for later, which earns interest and is insured up to federal limits at insured institutions.

Savings rateThe share of your income you save, found by dividing what you saved in a period by what you earned in that same period.

Scarcity mindsetThe narrowed focus that comes from having too little money or time, which pulls attention to the shortage and leaves less mental room for everything else.

Semi-monthly payBeing paid twice a month on set dates, 24 paychecks a year, as opposed to biweekly pay every two weeks, which comes to 26.

Shared expensesCosts two or more people agree to split, such as rent, utilities, groceries or a shared subscription, as opposed to costs each person covers alone.

Side hustlePaid work done alongside a main job or other commitments, such as freelancing, delivery driving or selling goods; the IRS treats the income as taxable.

Simple interestInterest figured only on the principal, never on interest already earned, so the same balance at the same rate adds the same amount each period.

Sinking fundMoney set aside in small, regular amounts for a known future cost, so the bill doesn't land on a single paycheck.

Spend save give jarsA way of teaching kids about money by splitting each allowance or gift into three jars: one to spend, one to save and one to give away.

Subscription auditGoing through every recurring charge you pay, adding up what each costs a year, and canceling the ones you no longer use.

Sunk costMoney, time or effort already spent that can't be recovered whatever you decide next. Letting it steer the next decision is the sunk cost fallacy.

T

Take-home payThe money that actually reaches you from a paycheck after taxes and other deductions are taken out, also called net pay or net income.

V

Values-based budgetingA budget built around the few things that matter most to you, so your flexible spending goes to those priorities first.

Variable expensesRegular costs whose amount changes from month to month, such as groceries, gas, utilities and eating out.

Z

Zero-based budgetA budget that assigns every dollar of income to spending, saving or debt, so income minus everything assigned equals zero.