Glossary
Following are definitions for key words as they are used in the financial life skills resource.
They may have different or additional meanings in other contexts.
A
- account
- an arrangement at a financial institution or investment firm for depositing,
withdrawing, borrowing or investing money
- account statement
- a record of transactions in an account at a financial institution
or investment firm, usually provided each month
-
actual return
- see real return
-
annual percentage rate (APR)
-
the actual rate of interest charged on a loan each year, calculated using standardized rules to help borrowers compare rates
- assets
-
things you own that have a financial value
- automated teller machine (ATM)
- a machine that allows you to do banking transactions by inserting an electronic card; also called an automated banking
machine (ABM)
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B
- balance
- the amount of money held or owing in an account
- balanced budget
- a budget in which income and expenses are equal
- balanced fund
- a type of mutual fund that holds a "balanced" mix of different
investments, typically stocks and bonds
- bank
- a financial institution that takes deposits, lends money and provides other
financial services
- bank failure
- when a bank does not have enough money to repay its depositors
- banking fees
- fees charged to customers for banking services
- bankrupt, bankruptcy
- when you cannot pay what you owe
- bill
- a written record of the amount you owe for goods or services purchased
- bi-weekly
- every two weeks
- bond
- an investment in which a government or company promises to repay money
borrowed from investors at a certain time and to pay interest at a specified rate
- budget
- an estimate of the income and expenses of a person, family or
organization, over a certain period of time
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C
- Canada Deposit Insurance Corporation (CDIC)
- a federal government
organization that provides insurance to protect money deposited in Canadian
banks and certain other financial institutions
- Canada Pension Plan (CPP)
- a Canadian government system in which you pay
a percentage of your earnings to a fund that provides income when you retire
- Canada Revenue Agency (CRA)
- the federal government agency that collects taxes and administers Canada's tax laws
- Canada Savings Bond (CSB)
- a bond issued by the Government of Canada that can be cashed at most Canadian financial institutions
- cash equivalent
- an investment that can be quickly converted to cash with little risk, such as a treasury bill
- cheque
- a written order to a bank, credit union or trust company to pay a certain
sum of money from the depositor's account to the person named on the cheque
- chequing account
- an account at a bank, credit union or trust company that
allows the depositor to write cheques
- collision coverage
- an insurance policy that pays for damage to a vehicle involved in a crash
- common share
- a share in the ownership of a company, usually giving the holder
a vote in the election of directors and in some other major corporate decisions
(see equities, shares, stocks)
- compensation
- (1) money paid to make up for a loss or injury
(2) the money and other benefits, such as medical and dental benefits,
retirement and vacation pay, paid to an employee
- compound interest
- interest that is paid on the original amount deposited, and
also on any interest that has been earned in previous periods; e.g., in Year
1, the bank pays you $5 interest on your $100 deposit; in Year 2, it pays you
interest on $105
- comprehensive coverage
- an insurance policy that pays for damage to or loss of a
vehicle from a wide range of risks, such as fire and theft
- coverage
- see insurance coverage
- credit
- (1) the ability to borrow money or charge purchases to be paid in the future
(2) an amount of money deposited in an account
- credit bureau
- a company that tracks your credit history and provides a credit
rating to companies you want to do business with
- credit card
- a card issued by a financial institution that lets you buy things "on
credit"; the financial institution pays the seller and you repay the financial
institution later
- credit card slip
- a receipt for a credit card transaction, usually signed by the cardholder
- credit check
- a review of your financial reputation and credit history
- credit rating
- a rating that summarizes your financial background and credit history,
used by financial institutions when deciding to loan you money
- credit record
- a record of your financial background and credit history, used to
determine your credit rating
- creditor
- a person or company who is owed money
- credit union
- a financial institution that is owned by its depositors and borrowers
- Credit Union Deposit Insurance Corporation
- a government organization that
provides insurance to protect money deposited in British Columbia credit unions
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D
- debit card
- a card that lets you pay for purchases by transferring money
electronically from your account to the retailer (often called an ATM card)
- debt
- money that you owe
- deductible
- see insurance deductible
- deduction
- see paycheque deduction, tax deduction
- deferred payment plan
- a purchase plan in which you can delay paying for a
purchase for a specified time, usually by paying the amount in instalments, with
interest
- deficit
- the amount by which your expenses exceed your income (opposite of
surplus)
- deposit
- money held in an account at a bank, credit union or trust company
- deposit insurance
- an insurance plan designed to protect the money you deposit if a
bank, credit union or trust company fails (see CDIC and CUDIC)
- diversification
- spreading your money over a variety of investments to reduce risk
- dividend
- a portion of a company's profits paid to shareholders
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E
- earnings
- money earned from work or investment; also profits
- electronic funds transfer (EFT)
- a system for transferring money electronically
between accounts at financial institutions
- employment insurance (EI)
- a Canadian government system in which you pay a
percentage of your earnings to a fund that provides income for a limited time if
you lose your job
- equities
- shares in a company
- expected return
- the overall profit you expect to receive from an investment in the
future; may be very different from the actual return that you eventually receive
- expense
- money you pay; also costs
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F
- face value
- (1) the value printed on the face of currency or other financial
instruments, like bonds (2) the amount that a lender will receive when a bond or debenture is repaid,
exclusive of interest (see maturity date)
- financial adviser
- a person who offers advice about personal finances, such as
buying or selling investments
- financial institution
- a bank, trust company, credit union or other institution that
offers financial services such as savings and chequing accounts, loans and
credit cards
- financial life skills
- the skills you need to manage money with knowledge and
confidence throughout your life
- financial literacy
- the ability to read about and understand financial concepts
- financial plan
- a written plan that helps you identify your goals and figure out how
to manage your money to achieve them
- fixed expenses
- expenses that do not change much from month to month, such
as rent and utilities
- fraud
- illegal trickery, deception or cheating; getting money or other profits by
deceiving people
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G
- Goods and Services Tax (GST)
- a federal government tax charged on most goods
and services
- gross income
- total income before any taxes or other costs are deducted
- guaranteed investment certificate (GIC)
- an investment in which you deposit money
with a financial institution for a fixed period of time and receive a specified rate of
interest
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H
- Harmonized Sales Tax (HST)
- a tax on most goods and services combining the
federal Goods and Services Tax and provincial sales taxes
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I
- identity theft
- when a scammer obtains your personal information and uses it without
your knowledge to make fraudulent purchases or commit other crimes
- income
- money you receive from work, gifts, business, investments, etc.
- income tax
- a percentage of the income you earn each year that must be paid to the
federal and provincial governments to pay for government services
- inflation
- a general increase in the price of goods and services over time;
governments use a "consumer price index," a bundle of things that most people
buy, to measure inflation
- insurance
- see insurance policy
- insurance agent
- a person who is licensed to sell insurance policies on behalf of one
or more insurance companies
- Insurance Corporation of British Columbia (ICBC)
- a BC government-owned
corporation that provides basic car insurance to all BC car owners and drivers
- insurance coverage
- the specific types of losses covered by an insurance policy and
the limits on the claims that may be made
- insurance deductible
- the portion of a claim under an insurance policy that you pay
before the insurance company pays the balance
- insurance policy
- a financial contract that you buy to protect yourself against the
possibility that something very costly (like a car accident) may happen in the future;
if the event does happen, the insurance company compensates you for the loss
according to the terms of the contract
- insurance premium
- the amount you pay (usually monthly or annually) for an
insurance policy
- insured
- the person whose property or life is insured
- insurer
- the insurance company
- interest
- the amount paid by a borrower to a lender for the use of money
- investment
- a way to put your money to work in the expectation that it will provide
income, increase in value or both
- investor
- someone who makes an investment
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L
- liability
- (1) an amount you owe to a creditor (someone who has loaned you money)
(2) in insurance, liability is your obligation to pay for harm you cause (see third
party liability)
- lifestyle
- a way or style of living; your normal habits, pastimes, attitudes, standard
of living, etc.
- line of credit
- a type of pre-approved loan that allows you to borrow money when
you need it, up to a maximum amount
- liquidity
- ability to sell an investment quickly at or near the current market
price
- loan
- money that you have borrowed, which you normally have to repay on a
specified schedule, with interest
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M
- maturity date
- the date on which a bond, debenture, GIC or term deposit is due to
be repaid
- Medical Services Plan (MSP)
- BC's public health insurance plan
- mortgage
- a loan (usually for buying a home) in which the lender can take
possession of the property if the loan is not repaid on time
- mutual fund
- a pool of money that is managed for a large number of investors by
a professional money manager
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N
- need
- a necessity; something you must have; something essential
- non-essential
- something you do not need; something that is not essential
- not sufficient funds (NSF)
- (also non-sufficient funds) when a bank will not cash
a cheque because there is not enough money in the cheque writer's account
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O
- overdraft
- a shortage in a bank account caused by taking out more money than you
had in the account; financial institutions will sometimes allow good customers
to make overdrafts for a short time, but they charge fees and interest for this
overdraft protection service
- overtime
- time you work at a job over and above the regular hours, usually at a
higher rate of pay
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P
- paycheque
- a cheque for the money you earn at your job
- paycheque deduction
- an amount automatically deducted from your paycheque for
taxes, employment insurance, Canada Pension Plan, other contributions, etc.
- pay stub
- a statement showing the money you earned at your job and deductions
from your earnings
- pension
- a regular payment made to a retired or disabled employee, usually from a
fund that the employer and employee have contributed to in prior years
- personal identification number (PIN)
- a confidential number you use to confirm
who you are at a bank machine, computer or phone system
- phishing
- trying to obtain someone's confidential information, password or PIN, by
pretending to be a legitimate email or website
- portfolio
- the bundle of stocks, bonds or other investments you hold
- premium
- see insurance premium
- principal
- the money you invest or lend in order to earn interest or other income
- priority
- something that is more important than other things
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R
- real estate
- property such as land and houses
- real return
- the return from an investment after taking inflation into account; e.g.,
if your investment earned 6% interest last year, but the cost of everything went
up 4%, your "real return" is 2%
- receipt
- a printed statement showing things you bought and what you paid for them
- Registered Disability Savings Plan (RDSP)
- a savings plan registered with the
government that allows you to reduce the taxes you pay on money you save for a
person with a disability
- Registered Education Savings Plan (RESP)
- a savings plan registered with the
government that allows you to reduce the taxes you pay on money you save for
post-secondary education expenses
- Registered Retirement Savings Plan (RRSP)
- a savings plan registered with the
government that allows you to reduce the taxes you pay on money you save for
retirement
- replacement value
- in an insurance contract, the cost of replacing an insured
item at its current price, even if that price is higher than what you originally
paid for it
- return
- the profit you make on an investment through interest, dividends or
increased value of the investment (see expected return, real return)
- risk
- the amount of uncertainty about the expected return from an investment,
including the possibility that the investment may lose money or become worthless
- risk tolerance
- how willing or comfortable you are to risk losing money on an
investment
- rule of 72
- a way to quickly estimate how long it will take an investment to double
in value (divide 72 by the annual return on the investment; an investment that
earned 6% a year would double in about 12 years)
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S
- savings
- money you have not spent
- savings account
- an account with a bank, trust company or credit union that pays
interest on the money you deposit and allows you to withdraw it at any time
- scam
- a fraudulent or unethical activity; a fraud or trick
- securities
- stocks, bonds, mutual funds and other types of investment
- securities regulator
- an independent government organization that regulates
trading in securities (like stocks and bonds) and protects investors
- self-employment
- working for yourself
- semi-monthly
- twice per month
- share
- stock; a unit of ownership of a company (see common share, stock, equities)
- shareholder
- someone who owns shares in a company (also called stockholder)
- simple interest
- interest that is paid only on the amount of the initial deposit and
not on any interest the deposit earns over time, unlike compound interest;
e.g., in Year 1, the bank pays you $5 interest on your $100 deposit; in Year 2,
it again pays you interest only on the original $100 deposit
- SMiShing
- using phone text (Short Message System or SMS) to send someone to
a false web address or phone number in order to request confidential
information
- social networking
- using a website to connect with people who share interests or
other things in common
- stock
- a share in the ownership of a company (see common shares, shares, equities)
- stock exchange
- a place where common shares and some other types of investment
can be bought and sold
- stockholder
- someone who owns shares in a company (also called shareholder)
- surplus
- the amount by which your income exceeds your expenses (opposite of deficit)
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T
- T1
- the form on which you report your income and calculate the amount of tax you
owe or any tax refund that is owed to you
- T2202A
- the form on which an education institution reports the sessions you are
enrolled in so that you can claim education deductions from your income tax
- T4
- the form on which an employer reports your earnings and paycheque
deductions so that you can include them in your income tax report
- T5
- the form on which a financial institution reports your earnings from investments
so that you can include them in your income tax report
- tax credit
- an amount you can deduct from the tax you owe
- tax deduction
- an amount you are allowed to subtract from your income before
calculating the income tax you owe
- Tax-Free Savings Account (TFSA)
- a savings account registered with the
government that allows people to avoid paying taxes on the income earned in the
account
- taxable income
- the part of your income you have to pay taxes on
- term
- a set period of time
- term deposit
- a type of deposit with a financial institution that is to be repaid to you
at a specified time (e.g., 90 days or one year)
- third-party liability policy
- a type of insurance policy that protects you if you have
to pay for harm to someone else (e.g., if your car hits someone else and you are
responsible for damages)
- treasury bill (T-Bill)
- a short-term, low-risk investment issued by a federal or
provincial government
- trust company
- a financial institution, similar to a bank, that can take deposits and
make loans; trust companies often provide other specialized services that banks
cannot, like administering estates and pension plans
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V
- vacation pay
- money an employer must pay an employee in addition to regular
pay to provide for annual holidays (usually 4% or more of total wages)
- variable expenses
- expenses that can change from month to month, such as food
and entertainment
- vishing
- using voice messaging or other telephone technology to request
confidential information by deception
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W
- want
- something you desire but do not need
- withdraw
- to take money out of an account
- withdrawal
- money you take out of an account
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Sources
The Canadian Oxford Dictionary (Oxford University Press, CD-ROM
version, 1998-2004)
Gage Canadian Dictionary (Gage Educational Publishing Company and
McClelland & Stewart Inc., CD-ROM version, 1998)
Cambridge Learners Dictionary (Cambridge Dictionaries Online, Cambridge
University Press, 2004-2010, www.dictionary.cambridge.org)
Glossary, Canada Deposit Insurance Corporation (www.cdic.ca/e/glossary.html, 2004-2010)
Glossary, Investor Education Fund (www.getsmarteraboutmoney.ca/tools_and_calculators/glossary/Pages/glossary.aspx, 2004-2010)
Glossary, Financial Consumer Agency of Canada (accessed July 21-23, 2004)
Glossary, Financial Consumer Agency of Canada (www.fcac.gc.ca/eng/glossaryeng.asp, 2004-2010)
Glossary of Insurance Terms, Canadian Life and Health Insurance Association Inc. (www.clhia.ca/e11.htm, 2004-2010)
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