Understand These Essential Financial Terms

Graduation marks both a conclusion and a fresh start.  As you start out in life, your finances can seem overwhelming. How can you start saving money? Taking out loans? Financing a house? Before you can set attainable goals for yourself, you have to have a solid understanding of some basic financial terms. That's where we can help. 

What is Zero-sum budget?

Through a zero-sum budget you track every penny you earn and spend. Then you use this information to plan your spending for the future to help you start saving.

What is Overdraft Protection?

Overdraft protection is a setting on your bank account that allows your debit card to be approved even if funds aren't available. There's often a fee for using overdraft protection.

What is a Credit Score?

Your credit score comes from your financial history and determines your creditworthiness. This is a metric financial institutions look at when deciding whether or not to loan you money.

What are Tax Deductions?

Tax deductions are amounts of money you can subtract from the amount you owe in taxes. You can save on your taxes through funds like your charitable donations and medical expenses.

What is Compound Interest?

Compound interest is the interest that’s calculated based on the principal amount and how often the interest is reapplied to the loan or account.

What is a Fixed-Rate Mortgage?

A fixed-rate mortgage is exactly what it sounds like – it’s a mortgage where the interest rate is fixed over the term of the loan.

What is Refinancing?

Refinancing is changing the terms of a loan for more favorable interest rates or payment schedules for the remainder of the loan.

What is a 401k?

 A 401k is a retirement savings account that can only be set up by your employer. There are different kinds of 401ks (Roth and traditional) and the difference is when your money within the account will be taxed.

Now that you have a better understanding of these basics, you can continue to learn about the world of finance and how you can be successful. 

As always, please contact the office if you have any questions. 

^{This communication is designed to provide accurate and authoritative information on the subjects covered. It is not however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.}

^{Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty.}

^{Written by Cetera and not the presenting representative and should not be construed as investment advice.}