ALL THAT JARGON
- Budget: A budget is the sum of your income minus the sum of your expenses over a defined period. When you work out your budget you can see if your outgoings are greater than your incomings.
- Cash management account: Similar to a transaction account, they can be used for day-to-day banking, such as depositing your pay, or making withdrawals and paying bills. They usually pay higher rates of interest, but most cash management accounts require you to maintain a minimum balance.
- Credit: This term has different meanings, depending on the situation. For example, if your account is in credit, that means you have money in your account that is available for you to use. So, if you have $10 in your account, your account is $10 in credit. It can also mean borrowed money that allows you to obtain goods now but to pay for them later. Typical forms of credit include credit cards, personal loans, overdrafts and home loans.
- Debt: Your debt is the amount of money you have borrowed from a bank or other lender.
- Direct debit: Sometimes you can authorise a business to take money directly o
ut of your bank account to pay a bill. For example, if you have a telephone bill, you can authorise your telephone company to withdraw money from your account automatically to pay for your bill. Direct debits are very convenient, but rescinding the arrangement requires formal notification to the business. - Disposable income: The amount of after-tax income that is available to divide between spending and personal savings. It is sometimes referred to as your “take home pay”. However, your disposable income is the net result of your income after you have taken account of your expenses.
- Dividend: Payment made from a company to its owners (shareholders) from profits made by the company.
- Expense: Money you pay out, including for housing, groceries, transportation, utilities, medical/health, insurance, clothing, entertainment, education and travel.
- Imputation credit: When an Australian resident shareholder receives a dividend, they may also receive an imputation credit for any tax already paid by the company. The shareholder’s tax liability can then be reduced by the amount of the tax credit. Also known as franking or dividend imputation.
- Income: Money you receive, including your salary or wages, interest from bank accounts, dividends from shares, rent from an investment property or board from an adult child.
- Inflation: An increase in the prices of goods and services in the economy.
- Managed fund: A type of investment that pools the assets of many investors into a single fund. Usually the investors have a common investment objective and strategy. Managed funds include property trusts, share funds and cash management trusts.
- Payday loan: A small short-term loan between paydays, often available to people who are unable to obtain credit through mainstream providers. The loans often come with exceptionally high interest rates and other charges.
- Personal loan: A loan available from a mainstream provider, such as a bank, building society, credit union or finance company.
- Return: The amount of money earned on an investment, usually expressed as an annual percentage.
- Risk: The variability of returns from an investment.
- Savings (deposit) account: An account often used to save money, perhaps for a holiday or Christmas spending. Depending on the account, if you have a balance above a minimum level you may be rewarded with higher rates of interest. Some savings accounts have a monthly fee with a limit on withdrawals.
- Term deposit: An account that offers a higher rate of interest, but ‘locks’ your money away for a set period. They are a good option if you don’t want to touch your savings.Transaction account: An account that lets you manage your day-to-day deposits and withdrawals. Depending on the account, it may be a basic account or have other account access, such as an overdraft facility. Some transaction accounts may have a monthly fee and may have limited or unlimited free transactions.
