Financial education is the knowledge that enables you to understand how money works. It is the art of investing and managing money as well as the ability to make financial decisions. Proper financial knowledge is the stepping stone to complete financial inclusion.
At Extramile Africa, we are interested in your financial decisions as this leads to freedom in your finances. Today, we enlighten you on 20 personal finance terms you should know as you use your mobile banking app.
1. APR (Annual Percentage Rate):This is the amount of interest you gain from keeping money in an account for a year. It usually does not include compound interest.
2. Cash:This is the money available on demand. It also includes money in a debit or savings account.
3. Credit:A lending term for when a customer purchases a good or service with an agreement to pay at a later date.
4. Debit:Any amount that you owe. Includes bills, loan payments and income tax.
5. Financial statement:A summary of the financial position of a business for a given period.
6. Guarantor:A person who promises to pay a loan in the event the borrower cannot meet the repayments.
7. Interest:The cost of borrowing money on a loan. It is also the amount earned on an interest bearing account.
8.Interest rate:A percentage used to calculate the cost of borrowing money or the amount to earn on savings.
9. Investment:The purchase of an asset such as shares or property for the purpose of earning money.
10. Loan:A finance agreement where a business or individual borrows money and pays it back through a payment process that involves added interest.
11. Maturity date:This is a specific time when a loan’s term ends and all outstanding principal and interest payments are due.
12. Profit:The total revenue a business earns minus the total expenses.
13. Scam:A deliberate and targeted deception to obtain money or information unlawfully.
14. Debit Card:It allows you to access funds available in account.
15. Zero – balance Account:An account which does not have the minimum or average balance request.
16. Accrued Interest:This is the interest accumulated over an investment but not paid yet.
17. Premium:The amount you pay monthly to maintain insurance coverage.
18. Mutual fund:A financial instrument that uses a pit of money from different investors to buy diversified stocks, bonds and other securities.
19. Inflation:The percentage by which the cost of goods and services increases and the value of money decreases over time.
20. Return on Investment (ROI):A calculation that works out how efficient a business is at generating profit from the original equity.
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Article Written By: Adeniyi Adekemi Oluwadarasimi