Money words, made clear

1099

The tax form for independent work, like gig apps or contract jobs. No taxes are taken out, so you have to set money aside yourself.

401(k)

A retirement account through your job. Money goes in from your paycheck, often before taxes. If your employer matches, that's free money: try to get all of it.

APR (annual percentage rate)

APR (tasa de porcentaje anual)

The yearly cost of borrowing money, shown as a percentage. It includes interest and some fees, so it's the best number to compare loans and cards.

A $1,000 card balance at 24% APR costs about $20 a month in interest (24% ÷ 12 = 2%).

BAH (Basic Allowance for Housing)

BAH (asignación para vivienda)

Military money for housing, based on location, rank and dependents. The GI Bill's monthly housing uses the E-5 with-dependents rate for the school's ZIP code.

Balance

Saldo

How much money is in an account, or how much you still owe on a card or loan.

Budget

Presupuesto

A plan for your money: what comes in, what goes out, and what's left. It's not about cutting everything, it's about deciding first.

Closing costs

Costos de cierre

Fees to finish buying a home, like the appraisal and title. They're often about 2% to 5% of the price, on top of the down payment.

Collections

Cobranza (colecciones)

When an unpaid bill is sent to a company that tries to collect it. It can hurt your credit for up to 7 years, so call early if you can't pay.

Compound interest

Interés compuesto

Interest that also earns interest. Over years, your money grows faster and faster. It works against you the same way on debt.

$100 at 10% a year becomes $110, then $121, then $133.10: each year's interest is bigger.

Copay

Copago

A set amount you pay for a doctor visit or prescription; your health insurance pays the rest.

Credit report

Reporte de crédito

The record of your loans, cards and payments that your score is built from. You can check yours for free at AnnualCreditReport.com.

Credit score

Puntaje de crédito

A number, usually from 300 to 850, that tells lenders how likely you are to pay back. Paying on time is the biggest part of it.

Credit utilization

Uso del crédito

How much of your card limits you're using. Lower is better for your score; a common guide is to stay under 30%.

A $300 balance on a $1,000 limit is 30% utilization.

Debt snowball and avalanche

Bola de nieve y avalancha

Two ways to pay off debts. Snowball: pay the smallest balance first for quick wins. Avalanche: pay the highest APR first to save the most interest.

Deductible

Deducible

What you pay yourself before insurance starts paying. A higher deductible usually means a lower premium.

With a $500 deductible and a $2,000 repair, you pay $500 and insurance pays $1,500.

Down payment

Pago inicial (enganche)

The part of a home or car price you pay up front. Many VA loans need none; FHA loans can need as little as 3.5%.

Emergency fund

Fondo de emergencia

Money saved only for surprises, like a car repair or losing work. A common goal is 3 months of bills.

Escrow

Escrow (cuenta de depósito)

An account your mortgage lender uses to pay your property taxes and home insurance. Part of each monthly payment goes into it.

Estimated taxes

Impuestos estimados

Tax payments self-employed people send the IRS during the year, usually in April, June, September and January.

Exchange rate

Tipo de cambio

How much of another currency one dollar buys. Services often give a worse rate than the real one and keep the difference, a hidden fee.

If the real rate is 60 and a service gives you 58, you lose 2 for every dollar sent.

Gross pay

Salario bruto

Your pay before taxes and deductions. It's the number in a job offer, not what lands in your bank.

High-yield savings account

Cuenta de ahorro de alto rendimiento

A savings account that pays much more interest than a regular one, often at online banks. Look for FDIC insurance, which usually covers up to $250,000.

Interest

Interés

The price of using someone else's money. You pay it when you borrow; you earn it when you save in an account that pays interest.

IRA and Roth IRA

IRA y Roth IRA

Retirement accounts you open on your own. Traditional IRA: you may pay less tax now. Roth IRA: you pay tax now, and qualified withdrawals in retirement are tax-free.

LES (Leave and Earnings Statement)

The military pay stub. It shows your pay, allowances like BAH, deductions and leave balance each month.

Minimum payment

Pago mínimo

The smallest amount you must pay on a card or loan each month to stay in good standing. Paying only the minimum keeps you in debt much longer.

Mortgage

Hipoteca

A loan to buy a home. The home is the guarantee: if payments stop, the lender can take it.

Net pay (take-home pay)

Salario neto

What you actually get after taxes and deductions. Budget with this number.

Net worth

Patrimonio neto

Everything you own minus everything you owe. It can be negative when you're starting out, and that's okay: what matters is that it goes up.

$5,000 saved + a $10,000 car − $12,000 in loans = $3,000 net worth.

Overdraft

Sobregiro

When you spend more than what's in your bank account. Many banks charge a fee each time, so it's worth turning overdraft off or getting alerts.

Premium

Prima

What you pay to keep an insurance policy, usually every month.

Principal

Capital (principal)

The amount you borrowed, not counting interest. Paying extra toward principal lowers your debt faster and cuts the interest you'll pay.

Remittance

Remesa

Money sent to family or friends in another country. The total cost is the fee plus the exchange rate difference, so compare both.

Tax refund

Reembolso de impuestos

Money the government gives back when more tax was taken out than you owed. It's your own money coming back, not a bonus.

TSP (Thrift Savings Plan)

The retirement savings plan for federal employees and service members, much like a 401(k). Your account stays yours after you leave the service.

W-2

The tax form you get from an employer each year. It shows what you earned and the taxes already taken out.

Withholding

Retención de impuestos

Taxes your employer takes out of each paycheck and sends to the government for you. Your W-4 form sets how much.