Budget
A budget is a plan for managing your money, created based on an estimation of your income and expenses for a set period of time, usually a month or a year.
For more information, check out: What is a Budget? A Super Simple Guide to Budgeting for Kids, Teens and Beginners
Emergency Fund
An emergency fund is money that you keep aside for unexpected expenses (like an accident or health emergency) or if you lose your job.
You should ideally have 3 to 6 months of your expenses in your emergency fund.
For more information, check out: What is an Emergency Fund? A Simple Explanation for Kids, Teens and Beginners
Inflation
Inflation is the increase in the prices of goods and services over time.
Because of inflation, the value of a currency (like the Dollar) – also called its purchasing power – reduces every year.
For more information, check out: What is Inflation? A Simple Explanation for Kids, Teens and Beginners
Borrowing or Loan
Borrowing is taking money from someone for a specific purpose or an unforeseen event, with a promise to pay it back.
This repayment to the lender usually happens over time, and you have to pay a little extra money – called interest.
For more information, check out: What is a Loan? A Simple Explanation of Borrowing for Kids, Teens and Beginners
Interest
Interest is like rent on money. If you let the bank use your money, the bank pays you extra money which is called interest.
Similarly, if you take out a loan from the bank, you pay the bank interest.
For more information, check out: What is Interest and Interest Rate? A Simple Explanation for Kids and Beginners
Income Tax
Income tax is tax that you pay to the government on the money that you earn. The higher your income, the higher is the income tax.
For more information, check out: What is Income Tax? A Simple Explanation for Kids, Teens and Beginners
Filing Taxes or Filing Income Tax Return
An income tax return is the name given to various forms that you can use to inform the government about the income you earned, and the taxes due on that income.
Filling out an income tax return and sending it to the government is called Filing Taxes or Filing Income Tax Return.
For more information, check out: What is Filing Taxes or Filing an Income Tax Return? A Simple Explanation for Kids
Tax Refund
A tax refund is money that a taxpayer gets back from the government if they paid more income tax than they owed.
For more information, check out: What is a Tax Refund? A Simple Explanation for Kids, Teens and Beginners
Needs
Needs are things that are essential for your survival – like food, water, clothing and housing.
Needs also include things that are necessary for a job or school – like a computer or smartphone, a car, gas, shoes, school supplies, etc.
For more information, check out: Needs vs Wants – What are They & Why It’s Important to Understand the Differences: A Simple Explanation for Kids & Beginners
Wants
Wants are things that are not necessary for your survival, but are nice to have as they improve the quality of your life.
For example, fancy restaurant meals, movies, vacations, streaming services, video games, etc.
For more information, check out: Needs vs Wants – What are They & Why It’s Important to Understand the Differences: A Simple Explanation for Kids & Beginners