Foundational concepts for managing money and building long-term stability.
Assets minus liabilities; a snapshot of your financial position.
Liquid cash buffer for surprises; reduces reliance on high-interest debt.
Earnings on principal plus prior earnings; growth accelerates over time.
Prices rise over time; the same money buys less (focus on real purchasing power).
Spreading risk across assets; reduces dependence on any single outcome.
Income minus expenses; the fuel for saving and investing.
Fixed are stable (rent), variable fluctuate (food). Knowing both helps planning.
Annual Percentage Rate; includes interest and some fees (useful for comparing debt).
Debt with high APR tends to dominate finances; prioritize paying it down.
Paying only the minimum maximizes interest paid and time to payoff.
Percent of credit limit used; high utilization can hurt credit scores.
A fund that tracks a market index; typically low-cost and diversified.
Annual fee as a % of assets; small differences compound over time.
Fees reduce compounding; lowering fees increases long-term outcomes.
Mix of stocks/bonds/cash; primary driver of risk and return.
How much volatility you can emotionally and financially handle.
When you need the money affects how much risk you can take.
Investing a fixed amount regularly; reduces timing risk.
How quickly you can convert an asset to cash without major loss.
Paying a known cost to reduce risk of rare, large losses.
Return after inflation; what matters for future purchasing power.
Return before inflation; can look better than real outcomes.
Money spent in one place cannot be used elsewhere; compare alternatives.
Keep buffers (cash, time, lower fixed costs) to reduce fragility.