An account is part of the relationship with your financial institution. For example, you may have a savings ‘account’ or a chequing ‘account’. An account can be compared to a piggy bank, kept by the financial institution, on your behalf. You can “open” an account to begin saving. Your account reflects your financial standing with the institution. For example, your loan ‘account’ may state that your remaining debt to a lender is a certain amount, while your savings ‘account’ may state that you have a thousand dollars which you own.


An asset is something you own that can be sold. If you own a cell phone, this is an asset since you could sell it in exchange for money.


The remaining amount on your account. For example, you have a hundred dollars in your savings account. You withdraw twenty dollars. Your balance is now eighty dollars. The available balance is very important, since it shows the amount in your account that can be used. For example, you may have just deposited a cheque from a client, worth two hundred dollars. Your available balance would not reflect that deposit until the client’s cheque has cleared.

Balance Sheet

A listing of all the assets and liabilities of a person or company. The surplus of assets over liabilities is the net worth, or what is owned free of debt.


The limit you place on your spending for a specific category. If your income is five hundred dollars, you may place a limit of two hundred dollars for groceries; one hundred for utilities, one hundred for savings and one hundred for transport. It is important to separate wants from needs. When you need something, you cannot live without it. You have to get it. However, you can do without a want; and in most cases, you can save money if you don’t spend it on something you do not need.


The ability to borrow money. One example of credit is a credit card. The limit on the card is the amount of credit that a financial institution gives you over time. When credit payments are made on time you may be viewed as having a good credit history.


This is money owed to someone or to a financial institution. If you wish to buy a car and you borrow the money from a credit union, you are indebted to the credit union. If, over time, you continue to pay monthly instalments, your debt will be consistently reduced.

Financial Planning

This is a process by which you estimate expenses compared with revenue and create an action plan for earning, spending and saving. It will help you reach financial goals and also serve as a guide so that you may see where you may perhaps be spending too much; and where you can save more.

Gross Income

The amount of money you have before your expenses. This is considered your taxable income.


This is a fee you pay for borrowing money. It can also be a rate of earnings on your savings. You may borrow money for a car with a rate of eight percent. This means that you are paying an additional eight percent on the initial cost of the car to the lender. You may get interest of two percent from the credit union for your savings.


This is a purchase you make in the hope that it will increase in value over time. Real estate (land) is usually considered a good investment. A CD or Certificate of Deposit is also a good investment, as it is a risk-free product sold by a financial institution which guarantees that you have a particular amount of money saved at your bank or credit union.


A representation of what is owed to a lender. For example, you may make a hire purchase buy from a store for a piece of furniture. The furniture is considered a liability until you pay the amount in full that was owed to the lender. A loan is a sum of money borrowed and you usually must pay it back with interest. In essence, it is a charge of an additional sum of money which is paid to the lender, along with the original amount of money lent to you.

Market Value

The current value on assets you own. Because you made a purchase for x amount of dollars does not mean that in two years’ time the item would have the same value. A car that is valued at one hundred thousand dollars today may only be valued at fifty thousand dollars in two years’ time.


A loan from a financial institution for the purchase of real estate. It is usually paid back over a certain number of years. Interest rates vary and you must be careful to shop around for the lowest rate of interest on your mortgage. After you repay the loan in full, the house or parcel of land is yours.

Net Income

The amount of money that remains after you pay all your expenses.

Net Worth

The amount that is left after you subtract your liabilities from your assets. Your net worth is an indication of how financially strong you are.


A drop in economic growth that lasts at least six months. During a recession, businesses sell fewer goods and services. Once a recession becomes severe (with total sales of goods and services down by more than 10% for a long period of time), a recession can be described as a depression.


While remittances can refer to a sum of money sent to another as payment for something, it can also mean a gift of money. For example, a parent may live overseas and send money for his child. This is a remittance.

Retirement Savings

Money that is saved towards your retirement. The earlier you begin saving, the better it is for you when you are retired, as retired persons no longer have a monthly income. You may choose a Registered Retired Savings Plan (RRSP) with a bank or credit union as this is a very structured and consistent way to save towards that time when you have finished working.


In essence, tax is what people pay to their government. There are many types of taxes. One kind of tax is the income tax. Every year, workers pay a percentage of their income, or salary, to the government of the country in which they live. Another kind of tax is a sales tax. For example, in some Caribbean islands, there is Value Added Tax (VAT) which is an additional payment for certain products and services.


An ‘action’ or activity that causes money to go into or come out of your account. It can also be viewed as money coming out or going into your hands. When you make a purchase at the supermarket, there is a cash transaction. You pay money (money leaves your hands) to get a product. When you get paid by your employer, money goes into your hands or into your account.