Must-Know Financial Terms to Kickstart Your Wealth Journey

When I first started my financial journey, terms like “net worth” and “compound interest” sounded like a foreign language. I’d hear people throw these words around and feel completely lost, wondering if I’d ever catch up. But once I took the time to break them down, I realized they weren’t as intimidating as they seemed—they just needed to be explained in a way that made sense. That’s why I’m sharing this list with you. I want to make these concepts easy to understand so you can confidently take charge of your finances and pass that knowledge on to someone else who might feel just as confused as I once did.  

Navigating the world of finances can feel overwhelming, but understanding a few key terms can make all the difference. Here are some must-know financial terms that will help you build confidence and make smarter money decisions:

1. Net Worth 
Simply put, this is what you *own* minus what you *owe.* Assets like savings, property, or investments add to your net worth, while debts like loans or credit cards subtract from it. Knowing your net worth helps you see the big picture of your financial health.

2. Compound Interest
This is the “magic” of growing money over time. When you earn interest on both your initial investment and the interest it’s already earned, your money starts to grow faster. Think of it as your money working hard for you!

3. Budget
Your budget is a plan for your money. It helps you track what’s coming in (income) and going out (expenses) so you can save for what matters most. A budget gives you control and peace of mind.

4. Emergency Fund
This is your financial safety net. Aim for 3–6 months of living expenses in a separate account to cover unexpected costs like car repairs or medical bills.

5. Diversification
Ever heard, “Don’t put all your eggs in one basket?” That’s diversification! By spreading your investments across different areas (stocks, bonds, real estate), you reduce the risk of losing it all.

Understanding these terms is the first step toward financial confidence. Knowledge is power, and when it comes to your money, it’s the key to achieving your goals.

Ready to take control of your finances and build a brighter future? Let’s make it simple and tailored to your goals. Contact me today for your FREE consultation, and let’s start your journey to financial confidence and success!

Start small, stay consistent, and watch your wealth grow!