MMT - Money Management for Teens

Money Management for Teens
Glossary

On my website, there may be some words that you do not understand. You can find those words on this page. To find the word you want, press CTRL+f, type in the word you would like to find, and press enter. If the word you are looking for is not there, or if there is a mistake in meaning, please contact me.

asset - something that goes up in value and puts money in your pocket (e.g. real estate, stocks, bonds…)
balance sheet – a balance sheet states your income and expenses
bank – one place to keep you money. With the bank, you can deposit, withdraw, and protect your money
bear market – a pessimistic market. People are selling because the stock is having a correction, or a fall in price.
bid – to place a request on a price. Simply put, an offer.
broker – an agent who invests for another person without owning the items invested. At the same time, they are receiving commission from the client.
budget – a plan on how to invest money
bull market – an optimistic market. People are buying because the stock is increasing in price. However, an increasing price usually ends in a correction.
commission – a percentage of money allowed to sales representatives, agents, merchants, for their service
commodity – an item that is traded, or a valued item
correction – a decrease in the price of the stock market
credit card – if you have one of these, you have to be very careful. Credit cards can be used in place of money, but can also have dangers. (See more in lesson 7)
debt – money you owe. You never want to be in debt. However, there is good debt and bad debt. Good debt is when you borrow money to make money. Then, you could pay back what you owe, with some extra money. Bad debt is when you borrow money to buy wants.
economics – social science. A breakdown of money, trade, distribution, and production of all goods and services.
ETF – Exchange Traded Fund. This is similar to an index fund, but the price for an ETF constantly changes.
expenses – what you spend your money on
goal – an aim that someone hopes or wants to accomplish. If you don’t have a goal, or in other words, a plan, you become part of someone else’s plans.
goal-setting – the process of setting a goal, or setting goals. Goal-setting is crucial (read more in lesson 9). Goals should be SMART:

Stated in writing
Measurable
Achievable
Realistic and have a
Time frame

globalization – many countries working together, and making the world smaller through technology
GPA – Grade Point Average. Education is important to earning money. Most jobs requires employees to have a GPA of 3 or higher.
human capital – another way of saying ‘investing in yourself’. This sound like to spend money on yourself, doesn’t it? Well, that’s partly right. Investing in yourself means to spend money and make the most out of your money (benefiting from it). Education is an example of human capital.
income – money coming in. Income is your earnings.
income statement – an income statement states your assets and your liabilities
index fund – an index fund lessens your risk by spreading money to other sources that invests your money for you.
inflation – inflation is the loss of the value of money. The four causes of inflation:

1. The supply of money goes up
2. The supply of other commodities go down
3. Demand for money goes down
4. Demand for other commodities go up

interest – the little extra money the bank gives to you in return of you putting your money in the bank
investing – to spend and devote money in order to get a return
investor – a person who invests. An investor can make a lot of money, and an investor can also be considered as a career choice.
IPO – Initial Public Offering, or a start up fund for something.
liability – something that decreases in value and takes money out of your pocket
money – a medium of exchange, including bills, coins, and other payment methods such as cheques, or credit cards.
money management – taking care of how to use money responsibly
mutual fund – although many people owns a mutual fund, it is not the best for you.
need – something you need in order to survive (e.g. water, food, clothing…)
net worth – another word for wealth. To have a net worth, you need more assets than liabilities. The equation: assets-liabilities=net worth
P/E ratio – the price over earnings ratio. This is used to find out if you are buying a stock at a good price. If the share price of a stock is $70 (P), and the earnings for each stock is $3 (E), then the equation is:

P/E = $70/$3
P/E = 23.3333%
This is an overpriced stock. You are buying the stock at 23.3% than the original price. However, you are getting a bargain if you are buying at 14% or lower.
P/E = $60/$6
P/E = 10%
You are getting a real bargain right here.

ROI – Return on Investments. This is what you get in return after you invest your money in something.
RRSP – Registered Retirement Savings Plan.
SIN – Social Insurance Number. This is like an ID card.
stock – a dividend or share of a specific company. Stocks prices can go up and down constantly.
stock market – another way of saying the stock exchange. It is a market where stocks are exchange and traded.
supply & demand – this is the reason why prices go up and down. The rule of supply and demand:

		Supply
		High	Low
Demand	High	Price is moderate	Price is high
Demand	Low	Price is low	Price is moderate

surplus – an amount that remains after you paid off all your expenses. To find your surplus: income - expenses
tax – an amount of money demanded by the government on all expenses.
trade – the process of exchanging. Back in history, before the use of money, people exchanged items, like hide and food. Nowadays, trade has become influenced with money.
trend – a fashion. A trend usually comes and passes by fast. A lot of people jump into trends. But as a good investor, you have to remember this: Don’t jump in when others jump in. That’s the time to sell.
TSX – Toronto Stock Exchange. This is the largest stock in Canada, including a lot of companies.
value investor – an investor who invests in companies which stocks have good prices.
want – something you can live without, but you would like to hold procession of
wealth – see net worth
yield – earning on dividends