Finance and business terms, in plain English.

A simple budget split: 50% of take-home for needs, 30% for wants, 20% for savings or extra debt payoff.

A plan that decides how every dollar of your income will be spent — before the month starts, not after.

Cash set aside in a safe, accessible account specifically for unplanned expenses or income loss.

Fixed expenses are the same every month (rent, insurance). Variable change with your behaviour (groceries, dining, gas).

Gross income is what you earn before deductions; net income is what actually arrives in your bank account.

When your spending rises every time your income rises — keeping you running in place financially.

The total value of what you own minus the total value of what you owe. One number that summarises your financial position.

Move your savings out of checking the moment you get paid, before you can spend any of it.

The percentage of your take-home pay you save or invest each month. The single biggest lever on when you can retire.

The money that actually lands in your bank account after taxes, retirement contributions, and other paycheck deductions.

The yearly cost of borrowing money, expressed as a percentage and including most fees — not just the interest rate.

The yearly return on a savings or investment account, including the effect of compounding interest.

A three-digit number (usually 300–850) lenders use to estimate how likely you are to repay borrowed money on time.

Pay off your highest-interest-rate debt first regardless of balance. Mathematically optimal for minimising total interest paid.

Pay off your smallest debt first regardless of interest rate, then roll its payment into the next-smallest. Optimised for motivation.

Total monthly debt payments divided by gross monthly income. Lenders use it to decide whether you can afford more borrowing.

Paying only the minimum on revolving debt keeps you in debt for years and triples or quadruples what you originally borrowed.

Replacing an existing loan with a new one — usually to lower the interest rate, change the term, or change the monthly payment.

A line of credit (most commonly a credit card) you can borrow against repeatedly up to a limit, paying only a minimum each month.

How you split your investments across asset classes — typically stocks, bonds, and cash. The biggest driver of long-term returns and volatility.

Interest earned not just on your original deposit, but on the interest that's already been added to it. The engine of long-term wealth.

Spreading your investments across many holdings so that no single one can sink your portfolio. The only free lunch in investing.

Investing a fixed amount on a regular schedule — regardless of price — so you buy more shares when prices are low and fewer when high.

A basket of stocks (or bonds, commodities) that trades on a stock exchange like a single stock. Most ETFs track an index.

The annual fee a mutual fund or ETF charges as a percentage of your invested amount. Compounds against you every year.

A mutual fund or ETF that holds every stock in a market index (like the S&P 500) instead of picking individual stocks. Cheap, diversified, boring — and that's the point.

Your personal ability — both financial and emotional — to handle losses in your investments without panic-selling.

Divide 72 by an annual return rate to estimate how many years money takes to double. Useful for fast mental math.

The income an investment produces, expressed as a percentage of its price. Different from total return — yield is just the income part.

A US employer-sponsored retirement account. Contributions come out pre-tax, grow tax-deferred, and most employers offer a matching contribution.

Money your employer contributes to your retirement account on top of your own contributions, usually as a percentage of your salary.

A US retirement account funded with after-tax dollars. Contributions grow tax-free and withdrawals in retirement are tax-free.

The process of earning the right to keep your employer's contributions to your retirement account. Leave too early and you forfeit some.

Profit from selling an asset (stock, property, crypto) above what you paid for it. Taxed differently depending on how long you held it.

Marginal rate is the rate on your next dollar of income; effective rate is the average rate across all your income.

Pre-tax contributions reduce your taxable income now but are taxed at withdrawal. Post-tax (Roth) contributions don't reduce taxes now but are tax-free at withdrawal.

A deduction reduces your taxable income; a credit reduces your tax bill directly. Credits are worth more, dollar for dollar.

The annualised version of MRR — what your subscription business would earn over a year at the current run-rate.

How much cash a startup spends each month above what it earns. Net burn = expenses − revenue.

The total cost of getting one paying customer. Marketing + sales spend in a period, divided by new customers from that period.

The number of months it takes for the gross profit from a new customer to repay what you spent to acquire them.

The rate at which customers cancel their subscriptions. Compounds against you — small churn improvements drive huge LTV improvements.

The direct costs of producing and delivering whatever you sell. Excludes overhead, marketing, and salaries unrelated to delivery.

Revenue minus the direct cost of delivering that revenue, divided by revenue. The percentage of each dollar of revenue you keep before operating expenses.

The total revenue (or gross profit) you expect to earn from a customer across their entire relationship with you.

The relationship between what a customer is worth to you over their lifetime and what you paid to acquire them. The most important single number in unit economics.

The total predictable subscription revenue your business earns each month. The headline metric for any SaaS business.

How many months a company can keep operating at its current burn rate before running out of cash. Cash ÷ monthly net burn.

The revenue and costs associated with one customer (or one transaction). The fundamental health check for whether scaling makes the business better or worse.

Operating cash flow minus capital expenditures. The cash left over after running and maintaining the business — available for growth, debt paydown, or owners.

The cash a business generates from its core operations, before financing or investing activities. The truest measure of business health.

Current assets minus current liabilities. A measure of short-term liquidity — what a business has on hand to cover near-term obligations.

A discount or upgrade a company offers when you try to cancel a subscription, designed to keep you as a customer.