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Financial Terms Glossary for Adults

Build your confidence with easy-to-understand definitions of today’s most important money terms—covering credit, debt, investing, and real-life personal finance.

Jump to a letter or scroll through the glossary for clear definitions and practical examples. Whether you’re managing family finances, planning for retirement, or making big purchases, this resource is here to help.

A–C

Adjustable-Rate Mortgage (ARM)
A home loan with an interest rate that may change periodically based on market conditions.
Amortization
The process of gradually paying off a loan through regular payments that include principal and interest.
Annual Fee
A yearly charge for using certain financial products, like credit cards or investment accounts.
Annuity
A financial product that pays out a fixed stream of income, typically used during retirement.
Asset
Anything of value that you own, such as cash, property, or investments.
Balance Transfer
Moving debt from one credit card to another, often to take advantage of lower interest rates.
Beneficiary
A person designated to receive assets or insurance benefits after the account holder's death.
Bond
A fixed-income investment where you loan money to an entity (corporate or government) in exchange for periodic interest payments and return of principal.
Budget Deficit
When expenses exceed income over a given time period.
Capital Gain
Profit from the sale of an asset such as stocks, real estate, or other investments.
Cash Flow
The total amount of money being transferred in and out of your household or business.
CD (Certificate of Deposit)
A savings product that holds your money for a fixed period at a fixed interest rate.
Child Tax Credit
A tax benefit for parents with dependent children.
Compound Interest
Interest calculated on the initial principal and also on the accumulated interest from previous periods.
Credit Utilization Ratio
The percentage of available credit you’re using; a factor in credit scoring.
Custodial Account
A financial account managed by an adult for a minor, typically for savings or investment.

D–F

Debt-to-Income Ratio (DTI)
A measure of how much debt you have compared to your income, used by lenders to assess creditworthiness.
Deduction (Tax)
An expense that can be subtracted from gross income to reduce taxable income.
Default
Failure to repay a loan according to agreed terms.
Diversification
Spreading investments across different assets to reduce risk.
Down Payment
An initial payment made when buying something expensive, like a home.
Earned Income
Money received from employment or self-employment.
Escrow
A financial arrangement where a third party holds funds until a transaction is completed (often used in home buying).
Estate Plan
A plan for how your assets will be distributed after your death.
FICO Score
A type of credit score widely used by lenders to assess credit risk.
Financial Planner
A professional who helps clients manage finances, plan for retirement, and achieve financial goals.
Flexible Spending Account (FSA)
A pre-tax account used for medical or dependent care expenses.
Foreclosure
The legal process of a lender taking control of a property after a borrower fails to make mortgage payments.
Fraud Alert
A warning placed on your credit file to prevent identity theft.

G–L

Gross Income
Total earnings before taxes and other deductions.
Health Savings Account (HSA)
A tax-advantaged savings account for people with high-deductible health plans, used for medical expenses.
Home Equity
The portion of your property you truly own; calculated as the home’s value minus the mortgage balance.
Income Tax
A tax levied by the government on income earned by individuals and businesses.
Index Fund
A mutual fund or ETF that tracks a specific market index, like the S&P 500.
Individual Retirement Account (IRA)
A tax-advantaged account for retirement savings.
Inflation
The rate at which the general level of prices for goods and services rises, reducing purchasing power.
Installment Loan
A loan repaid over time with a set number of scheduled payments.
Liability Insurance
Coverage that protects against claims resulting from injuries and damage to people or property.
Liquidity
How easily an asset can be converted into cash without loss of value.
Living Will
A legal document stating a person’s wishes regarding medical treatment if they become incapacitated.

M–R

Margin Account
A brokerage account that allows investors to borrow money to buy securities.
Mortgage
A loan used to purchase a home, typically repaid over 15 to 30 years.
Net Worth
Your total assets minus your total liabilities.
Pay-As-You-Go (PAYG)
A tax withholding system where taxes are taken from each paycheck.
Pension
A retirement plan that provides a fixed payout to employees after retirement, often funded by employers.
Power of Attorney
A legal document granting someone authority to act on your behalf in financial or medical matters.
Pre-Tax Contributions
Money contributed to retirement or healthcare accounts before taxes are deducted.
Principal Balance
The amount of a loan or investment without interest.
Refinance
Replacing an old loan with a new one, usually with better terms.
Required Minimum Distribution (RMD)
The minimum amount retirees must withdraw annually from retirement accounts, starting at a certain age.
Renter’s Insurance
A policy that covers personal belongings in a rental property and liability protection.

S–Z

Secured Loan
A loan backed by collateral (e.g., mortgage or auto loan).
Self-Employed
Working for oneself rather than an employer; includes freelancers, contractors, and small business owners.
Social Security
A government program that provides income to retirees and people with disabilities.
Standard Deduction
A fixed dollar amount that reduces taxable income, available to most taxpayers.
Stock
A share of ownership in a company.
Subsidized Loan
A student loan where the government pays the interest while the borrower is in school.
Tax Credit
A direct reduction in the amount of taxes owed.
Tax-Deferred
Income that is not taxed until it is withdrawn, often used in retirement accounts.
Term Life Insurance
Life insurance coverage for a specific period of time with fixed premiums.
Trust
A legal entity that holds assets on behalf of a beneficiary.
Unsecured Loan
A loan not backed by collateral, typically based on creditworthiness.
W-2 Form
A tax form employers provide to employees showing earnings and tax withholdings.
W-4 Form
A form employees submit to indicate how much tax to withhold from their paychecks.
Withholding Allowance
Used on the W-4 to determine how much federal income tax is withheld from pay.

Why Understanding Financial Terms Matters

Knowing these terms gives you a real advantage—whether you’re managing a household, planning for retirement, paying off debt, or making big purchases. Financial confidence comes from understanding your options, reading the fine print, and recognizing your rights and responsibilities. The right knowledge helps you avoid costly mistakes, spot opportunities, and take control of your money at every stage of life.

Want to Learn Even More?

Explore guides, educator tools, and support resources to boost your money smarts—wherever you are in your financial journey.

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6213 N. Cloverdale Rd, Suite 130, Boise, ID 83713
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You hereby authorize and instruct Debt Reduction Services, Inc. (DRS, dba Money Fit by DRS) and/or its assigned agents to:
  • Obtain and review your credit report, and
  • Request verifications of your income and rental history, and any other information deemed necessary for improving your housing situation (for example, verifying your annual property tax obligations and homeowner’s insurance fees)
Your credit report will be obtained from a credit reporting agency chosen by DRS. You understand and agree that DRS intends to use the credit report evaluate your financial readiness to purchase or rent a home and/or to engage in post-purchase counseling activities and not to grant credit. You understand you may ask any questions pertaining to your credit report. However, while DRS will review the information with you, the company is not able to furnish you with a copy of your credit profile. You hereby authorize DRS to share your information from your credit report and any information that you provided (including any computations and assessments produced) with the entities listed below to help DRS determine your viable financial options.
  • Banks
  • Counseling Agencies
  • Debt Collectors
  • Landlords
  • Lenders
  • Mortgage Servicers
  • Property Management Companies
  • Public Housing Authorities
  • Social Service Agencies
Entities such as mortgage lenders and/or counseling agencies may contact your DRS counselor to evaluate the options for which you may be eligible. In connection with such evaluation, you authorize the credit reporting and/or financial agencies to release information and cooperate with your DRS counselor. No information will be discussed about you with entities not directly involved in your efforts to improve your housing situation. You hereby authorize the release of your information to program monitoring organizations of DRS, including but not limited to, Federal, State, and nonprofit partners for program review, monitoring, auditing, research, and/or oversight purposes. In addition, you authorize DRS to have your credit report pulled two additional times to conduct program evaluations. You also agree to keep DRS informed of any changes in address, telephone number, job status, marital status, or other conditions which may affect your eligibility for a program you have applied for or a counseling service that you are seeking. Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.

Client Privacy, Data Security, and Client Rights Policy

NOTE: This sheet is to inform new or returning clients about our services, records, fees, and limitations that may affect you as a consumer of our services. This form also discloses how we might release your information to other agencies and/or regulators. If you do not understand a statement, please ask a Debt Reduction Services (DRS) counselor for assistance.

Debt Reduction Services, Inc. (DRS) has put into place policies and procedures to protect the security and confidentiality of your nonpublic personal information. This notice explains our online information practices and how we use and maintain your information to conduct our financial education and credit counseling sessions and to fulfill information and question requests. This privacy policy complies with federal laws and regulations.

To provide our financial education and credit counseling services, we collect nonpublic personal information about you as follows: 1) Information we receive from you, 2) Information about your transactions with us or others, and 3) Information we receive from your creditors or a consumer reporting agency. We do not share this information with outside parties.

We use non-identifying and aggregate information to better design our website and services, but we do not disclose anything that could be used to identify you as an individual.

You hereby authorize DRS, when necessary, to share your nonpublic personal, financial, credit, and any information that you provided (including any computations and assessments produced) with the following entities in order to help DRS provide you with appropriate counseling or guide you to appropriate services: third parties such as government agencies, your lender(s), your creditor(s), and nonprofit housing-related and other financial agencies as permitted by law, including the U.S. Department of Housing and Urban Development.

To prevent unauthorized access, maintain data accuracy, and ensure the correct use of information, we have put in place appropriate physical, electronic, and managerial procedures to safeguard and secure the information we collect online. We limit access to your nonpublic personal information to our employees, contractors and agents who need such access to provide products or services to you or for other legitimate business purposes.

Debt Reduction Services, Inc. complies with the privacy requirements set forth in the HUD housing counseling agency handbook 7610.1 (05/2010), including the sections 2-2 Mc, 3-1 H(2), 3-3, 5-3 F, and Attachment A.5. At all times, we will comply with all additional laws and regulations to which we are subject regarding the collection, use, and disclosure of individually identifiable information.

  1. Services: DRS provides the following housing-related services: counseling that includes Homeless Assistance, Rental Topics, Pre-purchase/Homebuying, and Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase); Education courses that include Financial literacy (including home affordability, budgeting, and understanding use of credit), Predatory lending, loan scam or other fraud prevention, Fair housing, Rental topics, Pre-purchase homebuyer education, Non-delinquency post-purchase workshop (including home maintenance and/or financial management for homeowners), and other workshops not listed above.

Please refer to DebtReductionServices.org for details of our services.

  1. Limits: Our services are limited to our normal weekday business hours. We do not provide individual counseling or education services after hours or on weekends, although our education courses are available 24/7.
  2. Fees: We do not charge fees for our financial management counseling and education. However, if you use them, you may have to pay for our Debt Management Program, Student Loan Counseling, Bankruptcy Certificate Services or certain financial education courses (homebuyer education, rental topics, fair housing, predatory lending, and post-purchase-non-delinquency including home maintenance and/or financial management for homeowners).
  3. Records: We maintain records of the services you receive, including notes about your progress or other relevant information to your work with us. You have the right to access and view your records by making a request to your counselor.
  4. Confidentiality: We respect your privacy and offer our services in confidence with the understanding that we may share such information with auditors and government regulators. Certain laws or situations may also lead to disclosing confidential issues, such as those involving potential child abuse or neglect, threats to harm self or others, or court subpoenas.
  5. Refusal of Services: You have the right to refuse services without any penalty or loss.
  6. Disclosure of Policies and Practices: You will be provided our agency disclosure statement.
  7. Sharing of Information: Sometimes we will need to contact other agencies or we may need to share your information, including your records, with other agencies or with regulators. We will do this only if you sign this form that gives us permission except for limited reasons; please see # 5 above for examples of such situations.
  8. Other: You have the right to be treated with respect by our staff, and we expect the same from you in return. We encourage you to always ask questions if something is not clear. We also encouraged you to express your thoughts and advocate throughout our services.

You acknowledge that this authorization will remain in effect for the duration of time that DRS serves as your housing counselor or financial education provider. You also acknowledge that should you wish to terminate this authorization, you will notify DRS in writing.

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Disclosure  Statement

NOTE: If you have an impairment, disability, language barrier, or otherwise require an alternative means of completing this form or accessing information about our counseling services, please communicate with your DRS representative about arranging alternative accommodations.

Program Disclosure Form

Disclosure to Client for HUD Housing Counseling Services

Debt Reduction Services, Inc. and its financial education arm, Money Fit by DRS, offer the following housing counseling and educational services related to housing, personal finance, and bankruptcy certificates to consumers:
  • Housing Education Courses: DRS offers many online self-guided education programs classified as Financial, Budgeting, and Credit Workshops (FBC), Fair Housing Pre-Purchase Education Workshops (FHW), Homelessness Prevention Workshops (HMW), Non-Delinquency Post Purchase Workshops (NDW), Predatory Lending Education Workshops (PLW), Pre-purchase Homebuyer Education Workshops (PPW), and Rental Housing Workshops (RHW). These courses help participants increase their knowledge of and skills in personal finance, including home affordability, budgeting, and understanding the use of credit, as well as predatory lending, loan scams, and other fraud prevention topics, fair housing, rental topics, pre-purchase homebuyer education, non-delinquency post-purchase topics including home maintenance and/or financial management for homeowners, homeless prevention workshop, and other workshops not listed above relating to personal finance and housing. Course details are found below under “Housing Workshops.”
  • Home Equity Conversation Mortgage (HECM) Counseling (RMC): Via telephone and virtual platforms, we offer the required HECM counseling nationwide in addition to in-person counseling in Boise, Idaho. We also offer in-home counseling options in thirty counties across southern Idaho for an additional fee to cover our travel and additional staff time costs.
  • Home Maintenance and Financial Management for Homeowners (Non-Delinquency Post-Purchase) (FBC): Clients receive counseling and materials on the proper maintenance of their home and mortgage refinancing. Clients can find help and resources by phone, in our Boise office, or virtually on all topics related to stabilizing their long-term homeownership.
  • Services for Homeless Counseling (HMC): Clients receive phone, virtual, or in-person (Boise) counseling to evaluate their current housing needs, identify barriers to and goals for housing stability, establish a path to self-sufficiency, and connect with emergency shelters, income-appropriate housing, and/or other community resources (e.g. mental healthcare, job training, transportation, etc.).
  • Pre-Purchase Counseling (PPC): Clients receive counseling through the entire homebuying process. Assistance may involve creating a sustainable household budget, understanding mortgage options, building their credit rating, and putting together a realistic action plan to set and achieve homeownership goals.  Additionally, clients will receive materials and resources about home inspections and other homeownership topics relevant to successfully maintaining a home.
  • Rental Housing Counseling (RHC): Via phone, in-person appointments (Boise, ID), or virtual platforms, clients receive housing counseling relevant to renting, including rent subsidies from HUD or other government and assistance programs. Topics can also address issues and concerns having to do with fair housing, landlord and tenant laws, lease terms, rent delinquency, household budgeting, and finding alternate housing.
DRS also offers the following services:
  • A Debt Management Program (DMP) for consumers struggling to pay their credit cards, collections, medical debts, personal loans, old utility bills, and past-due cell phone accounts;
  • The Budget Briefing and Debtor Education Certificates that are required during the Bankruptcy filing process;
  • A Student Loan Repayment Plan Counseling and application service.

Relationships with Industry Partners

Through such services, DRS has established financial relationships with hundreds of banks, credit unions, and creditors such as American Express, Bank of America, Barclays, Capital One, Chase, Citibank, Credit One, Discover, Synchrony, US Bank, USAA, Wells Fargo, and others.

No Client Obligation

The client is not obligated to receive, purchase or utilize any other services offered by DRS or its exclusive partners to receive financial education or housing counseling services. Alternatives: As a condition of our counseling services, in alignment with meeting our client services goals, and in compliance with HUD’s Housing Counseling Program requirements, we may provide information on alternative services, programs, and products available to you, if applicable and known by our staff. Alternative DMP services include negotiating better repayment terms directly with your individual creditors, paying your debts as agreed, or, in extreme cases, filing for personal bankruptcy. Alternative credit and education services can be found through MyMoney.gov or the Jump$tart Clearinghouse of online financial education resources. Housing counseling alternatives can be found through HUD at www.hud.gov/findacounselor.
Finally, you understand that you may revoke consent to these disclosures by notifying DRS in writing.
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Housing Counseling and Education Fee Schedule

 

Online Education Program Fees*

Homebuyer Education Course: $59 per participant

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours)

Rental, Fair Housing, Predatory Lending / HOEPA, Post-Purchase (Non-delinquency post-purchase workshop, including home maintenance and/or financial management for homeowners) Online Workshops: $49 per participant

  • Approximately 1 hour each

Other Self-Guided Financial Literacy Webinars (e.g. credit, budgeting, homeless prevention, debt prevention): $0

One-on-one Counseling Fees*

Pre-purchase Homebuying Counseling, Rental Counseling, Post-purchase Ownership Maintenance and Financial Management: $75

  • Session by the hour

Reverse Mortgage/HECM Counseling with Required Certificate:

  • $200†

Credit Report Fee: Paid Directly by Client

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page

†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there).

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Housing Counseling and Education Fee Schedule  

Online EDUCATION Program Fees* 

eHome Homebuyer Education Course: $99 per household** 

  • Self-paced course available here, our online housing counseling and education center. Certificates will be automatically generated upon completion of the course (approximately 6-8 hours) 

Online Workshops: $49 per participant 

  • Rental, Fair Housing, Predatory Lending Post-Purchase, HECM Family Member  
  • Approximately 1 hour each 

Other Self-Guided Financial Literacy Webinars: $0 

  • Credit, budgeting, homelessness prevention, debt prevention 
  • Approximately 30-60 minutes each 

One-on-one COUNSELING Fees* 

Pre-purchase Home Buying, Renter Issues, Homelessness, and Fair Housing: $0  

Post-purchase Ownership and Maintenance, HOEPA or Financial Management $75/hr  

Reverse Mortgage/HECM Counseling with Required Certificate $200 per household†  

Credit Report Fee Paid Directly by Client 

*Fees for all but our online education courses and workshops can be paid online by debit card, credit card, or PayPal or in person by cash, check or money order to: “Debt Reduction Services, Inc.” Registration fees are non-refundable 24 hours or less before the start of an in-person course or workshop. Certificates are non-transferable 

*Fees may be waived for households with income of 150% or less of that identified on the US Department of Health and Human Services Poverty Guidelines Page 

**Household is an individual or a couple  
†Home visit counseling is available in 30 southern Idaho counties for potential HECM borrowers at additional costs to cover our travel (IRS reimbursement rates apply) and staff time ($50 per hour or fraction there)