Financial Terms Everyone
Should Know, which are
used in daily lives

1. Emergency Fund

An emergency fund can be understood as a pool of money set aside for unexpected expenses. These expenses may include

• Medical bills
• Car repairs
• Unemployment
• Debt and more.

These funds help to avoid debt and ensure financial stability. One can keep an ideal amount of 3 to 6 months' worth of expenses aside. To keep emergency funds aside, one can seek help from the best money management app Spendable which is available on both Android and iOS.

2. Discretionary Spending

Discretionary spending can be understood as those expenses which are non-essential and can be reduced or eliminated. This may include going out for dinner, seeking entertainment like going to movies or indulging in a hobby that requires investment. As these can be reduced during financial difficulties, it can free up funds for savings.

3. Fixed Expenses

Fixed expenses can be understood as those expenses which are regular. In other words, these are unavoidable costs that do not change with time. This may include expenses like

• Rent
• Mortgage
• Utilities like water, gas, electricity, etc.
• Insurances
• Subscription services
• Debt repayments and more.

As these remain the same each month, it is essential to prioritize fixed expenses. You can value the expenses by relying on a pro budget app like Spendable. This would ensure that all your essential needs are met through the use of varied features of this featured multilingual app.

4. Variable Expenses

Variable expenses are those that change monthly. These expenses may include groceries, gas, entertainment, travel and more. These can be adjusted based on your budget and priorities. You should monitor and adjust variable expenses to stay within budget. Lastly, you can allocate funds effectively by relying on an AI-based budget tracker app like Spendable.

5. Inflation

Inflation can be understood as a sustained increase in the general price level of goods and services. This may lead to impacts like reducing purchasing power, increasing the cost and effects on savings as well as investment. The best thing you can do in such times is to invest in assets that perform well.

6. Cash Flow

Cash flow can be understood as the movement of money into or out of your accounts every month. Positive cash flow means more money is coming in than it is going out. However, you can rely on the financial management apps to monitor cash flow. This would ensure that the income exceeds the expenses and allocate excess funds towards savings as well as investment.

7. Liabilities

Liabilities can be understood as debts or financial obligations. This may include credit card balances, loans, mortgages and more. Because of liabilities, it can lead to reduced net worth, restrict financial flexibility and increase expenses. When liabilities are managed, it prioritizes debt repayment, negotiates lower interest rates and prevents new debt.

8. Gross Monthly Income

Gross monthly income can be understood as total monthly earnings before taxes and deductions. It is essential that one accurately calculates their income to create a realistic budget and a financial plan. One can even choose to use expense tracker applications, for example, Spendable to set a budget or for future financial planning.

9. Net Worth

Net worth can be understood as the total value of your assets minus liabilities. This represents overall financial health. When it comes to the calculation, the assets including savings and investments and liabilities including debts and loans are taken into account. However, you can monitor your net worth to track progress towards financial goals.

10. Financial Goals

Financial goals can be understood as specific, achievable and objectives. This may include saving for a down payment, paying off a debt or for retirement. When setting financial goals, it is important to focus on financial efforts, create a plan and measure progress. These can be done by using money management applications like Spendable.

• When you understand the financial concepts in a better way, it allows you to make informed money decisions, investments and financial planning.
• Being familiar with financial terms allows one to have effective communication with financial advisors, bankers and more.
• As the financial landscape keeps evolving, knowing financial terms can allow you to stay informed and carry out money handling in a better way.
• When financial terms are known, it empowers them to navigate complex financial situations and avoid pitfalls.
• As you understand financial concepts, it allows you to make informed investment decisions, create a realistic budget, and set long-term financial goals.