Can you speak fluent "money", or does your head start to swim when you hear financial and economic terms? They’re not a foreign language, even though they seem that way sometimes. But these terms are important to get a handle on, because, like it or not, they’ll become a part of your life.

Here are the basics:

This is the amount of money that exists at any given time. The balance of a checking or savings account is what’s left after a transaction, like a deposit or withdrawal. When you "balance your checkbook", you’re figuring out how much you’ve got in the account after you’ve written checks, taken out money, deposited cash, etc. With loans and credit cards, the balance is the amount that needs to be paid, or the amount you owe, at any given time.

With a bond, you are lending money to a company, and over time the company pays you back the money plus interest. The longer you lend them the money for, the higher the rate of return will be.

Budget

Personal budgets are plans for how you’ll spend your income over a certain period of time, such as one month. A good budget will help you keep track of how your money is being spent, and help you make changes to your spending habits in the future. Budgets applied to companies, schools, projects, etc. work on the same principle.

Certificate of Deposit (CD)

Essentially, a loan you’re making to the bank. The bank agrees to take your money, with a promise to repay it, with interest, at a specific future time.

Checking Account

The most common type of personal bank account, set up for frequent withdrawals and deposits, mostly as checks that are written and signed in place of cash. Checking accounts do not earn interest. When you write a check to someone from your checking account, they can cash it or deposit it in their own bank account, and the amount of the check is deducted from your balance. If you write a check for an amount greater than your current account’s balance, the check will "bounce", or get returned, and you will be fined.

Credit Card

A piece of plastic with an account number and your signature (for identification). In place of paying cash, you make purchases to get "charged" on this account. Your credit card company sends you a monthly statement with a list of items and amounts charged to your account during a certain time period. Some credit cards require you to pay the sum of those purchases each month. Other credit cards let you pay a minimum amount toward the balance, but you will be charged interest each month on any unpaid balance. Credit cards make their money on this interest.

Your bank or credit card statement will list all deposits and payments as "credits"; and all withdrawals or purchases as "debits".

Direct Deposit

A system by which your employer will automatically deposit your paycheck into your checking or savings account.

Down Payment

The payment you make when purchasing a large item, such as a car or house. This payment is larger than any future payments, and the required down payment varies depending on what you’re buying and who you’re buying it from. The more you make in your down payment, the less you’ll need to pay in the future (and the less you’ll have to pay interest on).

EFT is the transfer of funds by means other than paper, such as Direct Deposit, Fedwire, automated teller machine (ATM), point-of-sale, and credit card transactions.

Gross

The amount of money earned before costs, taxes, and other expenses are subtracted. You may "gross" $10.00 per hour but will take home less than that after taxes are taken out; a new movie may "gross" $100 million at the box office, but will net much less than that after production and marketing costs are covered. (See "Net")

Income Tax

The money that the government takes from your paycheck to help pay for public services like highways and social programs. The amount taken out is a percentage of your income; the more you earn, the more taxes you will pay on it. Most people elect to have a certain amount of income tax "withheld" from their paychecks.

Interest Rate

There are two types of interest: interest you earn, and interest you pay. Interest you earn is the amount a bank pays you in exchange for keeping your money in an account with them. Interest you pay is the amount a bank charges you to borrow money from them, in the form of a loan or credit card. Interest is expressed in percentages, and is calculated based on balance of your account or the amount you borrow (also known as "principle").

The amount of money you put into a savings account, certificate of deposit, business (stocks) or real estate in order to make a profit.

Loan Approval

When you apply for a loan from a bank, the bank needs to decide if you are a "safe bet" and will pay them back on time. Loan approval depends on the amount of money you want to borrow, how long you’d like to take to pay it back, and whether you’ve paid loans and bills on time in the past (your "credit history"). A bad credit history can haunt you for years, so it’s important to keep all your loans and bills current.

The name given to a loan that is specifically given for a real estate purchase like a home. Mortgages are paid in monthly installments over traditionally longer periods of time than other loans (usually 10, 15, 20 or 30 years).

Net

The amount of money you make after taxes and other deductions are removed. (See "Gross")

Sales Tax

The government also makes money for public goods and services by applying this additional charge to the price of something you purchase. Sales tax varies by city, and is often prohibited with certain items, such as food.

Savings Account

As opposed to a checking account, a savings account is a more stable place to store money and has fewer transactions. Savings accounts earn interest from the bank. (See "Interest Rate"). There are many different kinds of savings accounts offering different amounts of interest depending on how much money you have in your account.

A stock is a share of ownership in a company. A company’s stock goes up in value if the company experiences higher demand or increased profit. (See "Supply and Demand") But if the demand goes down, the value of the stock may fall as well. When you buy or sell a stock, it actually takes place at the stock exchange where the stock is listed, and the buying and selling is done on your behalf by stock "brokers".

Supply and demand tells us what the price of anything is going to be.

If the supply of an item, like goods or services, is limited, the demand for it is greater. The greater the demand, the greater the cost. "Demand Driven Inflation" occurs when the opposite happens: the demand for something suddenly rises, so the cost rises as a result.

Transfer Funds

Moving money from one account to another. If you need to pay for something with a check and there is not enough money in your checking account, you may need to transfer funds (money) from your savings account to your checking account. (See "Electronic Funds Transfer")

W-4 Form

Employee's Withholding Allowance Certificate. You will fill this out when you start a new job, and is a worksheet that tells the government how much money you are "allowing" them to "withhold" from your paycheck for taxes. If you have the government take too little from your paycheck, you'll owe money at tax time. If you instructed the government to take too much money from your paycheck, you'll get a refund.