Plain-English definitions of the most important personal finance terms, from budgeting and saving to investing and Islamic finance.
Anything you own that has value and can be converted to cash.
The annual cost of borrowing money, including interest and fees.
A plan for how you will spend and save your income over a set period.
Interest earned on both the original amount and the interest that has already been added.
A number that represents how likely you are to repay borrowed money.
The percentage of your monthly income that goes toward debt payments.
Spreading investments across different assets to reduce risk.
Money set aside to cover unexpected expenses or loss of income.
The general increase in prices and decrease in purchasing power over time.
A debt or financial obligation you owe to another person or institution.
How quickly an asset can be converted to cash without losing value.
Your total assets minus your total liabilities.
The minimum amount of wealth that makes zakat obligatory.
Return on Investment: a measure of how much profit you earn relative to what you invested.
A specific amount of money you plan to save by a target date.
An annual charitable obligation in Islam based on eligible wealth.