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Speak The Language Of Money To Reduce The Fear Of It

Fear and uncertainty can take hold when you don't know how to speak a language or understand certain words.

In the Harry Potter series, everyone refuses to say the name of Voldemort which only gave him more power over them. That is, until The Boy Who Lived came along and broke that trend.

If I walked into a room of people from Portugal, I'd feel kind of uncomfortable because I wouldn't know what anyone was saying.

But if someone walked up to me and spoke English, it would cause me to relax because I would be able to navigate my way through the room with the help of a translator. 

Language is power.

This is why people are intimidated by money (and law and medicine and business and the list goes on) because they don't know how to speak the language of finance.

This is no Duolingo course but its a good starter kit of common terms that everyone should know about money.

25 Terms Everyone Should Know

1. Compound Interest - Interest that is earned on both the principal amount and any interest that has been accumulated over time.

2. Asset - Anything owned by a person or a company that has monetary value, such as property, stocks, or cash.

3. Liability - Any financial obligation or debt that a person or a company is responsible for, such as a loan or a mortgage.

4. Budget - A financial plan that outlines an individual's or a company's expected income and expenses over a specific period of time.

5. Equity - The value of an asset minus any liabilities, representing the portion of the asset that is owned by the owner.

6. Revenue - The income generated by a business or an individual, typically from the sale of goods or services.

7. Expenses - The costs incurred by a business or an individual to generate revenue, such as rent, wages, or materials.

8. Capital - The financial resources available to a business or an individual, which can be used to invest or start new ventures.

9. Interest Rate - The percentage at which an amount of money is borrowed or lent, typically expressed as an annual percentage.

10. Return on Investment (ROI) - The measure of profitability for an investment, calculated as the ratio of the investment's gain or loss to its initial cost.

11. Amortization - The process of paying off debt over time by making regular payments that include both principal and interest.

12. Dividend - A portion of a company's earnings that is distributed to its shareholders as a form of payment for their investment.

13. Gross Domestic Product (GDP) - The total value of goods and services produced within a country's borders during a specific period of time.

14. Inflation - The rate at which the general level of prices for goods and services is increasing, reducing the purchasing power of a currency.

15. Liquidity - The ability of an asset to be easily converted into cash without a significant loss in value.

16. Mutual Fund - An investment vehicle that pools money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities.

17. Portfolio - The collection of investments owned by an individual or a company, including stocks, bonds, mutual funds, and other assets.

18. Risk - The probability of loss or uncertainty associated with an investment or business decision.

19. Stock - A type of security that represents ownership in a company, giving the shareholder a claim on the company's assets and earnings.

20. Volatility - The degree of fluctuation in the price or value of an asset or security over a period of time, reflecting the level of risk associated with that asset.

21. Bond - A debt security issued by a company, government, or other entity that promises to repay the principal amount plus interest at a specified rate and time.

22. Capital Gain - The profit earned from the sale of a capital asset, such as stocks, real estate, or other investments, that exceeds the purchase price.

23. Credit Score - A numerical rating assigned to an individual's creditworthiness based on their credit history and financial behavior.

24. Hedge Fund - A private investment fund that pools money from high net worth individuals and institutional investors to invest in a variety of assets, often using complex strategies.

25. Net Worth - The total value of an individual's or a company's assets minus their liabilities, representing their overall financial position.

Don't be intimidated by these words or terms. They're really simple when you just think about it in plain terms.

Liabilities = owe money = bad

Assets = stuff I own worth money = good

See? Nothing scary about that. You got this!

Keep on learning more terms and you'll be surprised how much more comfortable you'll become when you start having money conversations.

70% of knowing what you're doing is sounding like you know what you're doing!