Glossary

A study technique where you close your notes and try to retrieve information from memory, rather than rereading. One of the most effective ways to retain information. Flashcards and self-quizzing are common forms.

A component of renter's or homeowner's insurance that covers hotel stays and meals if a covered event like a fire makes your home uninhabitable while repairs are made.

A yearly charge some credit cards impose in exchange for rewards, perks, or access. Entry-level and starter cards typically have no annual fee. Premium travel or rewards cards often do.

The yearly interest rate charged on borrowed money, expressed as a percentage. On a credit card, it's the rate applied to any balance you carry past your due date. On a loan, it reflects the total annual cost of borrowing. A higher APR means you pay more over time.

A structured training program where you earn a wage while learning a skilled trade or profession on the job. Common in construction, manufacturing, and healthcare. Registered apprenticeships through the Department of Labor end with a recognized credential.

Software employers use to filter resumes before a human reviews them. ATS systems scan for keywords from the job description. Mirroring the language in a job posting on your resume improves your chances of passing through.

A state where the driver who caused an accident is legally responsible for damages. Their insurance pays for the other party's injuries and property damage. Most U.S. states are at-fault states.

Moving existing credit card debt to a new card, typically one offering a 0% introductory APR period. This lets you pay down the balance without accruing interest for a set time, usually 12 to 21 months. A transfer fee of 3 to 5% usually applies.

A question that asks you to describe how you handled a past situation, usually starting with "Tell me about a time when..." The STAR method (Situation, Task, Action, Result) is the standard framework for answering these.

A short-term financing option from services like Klarna or Afterpay that splits a purchase into installments. Late payments can damage your credit, and it can encourage overspending. If you need BNPL to afford something, that's a sign not to buy it right now.

An account that lets you buy and sell investments like stocks, ETFs, and index funds. Unlike a Roth IRA or 401(k), it has no contribution limits and no tax advantages, but also no restrictions on when you can withdraw money.

Using a credit card to withdraw cash from an ATM. Cash advances carry higher interest rates than regular purchases, have no grace period (interest starts immediately), and often include additional fees. Avoid them except as a last resort.

The percentage of medical costs you pay after meeting your deductible. At 20% coinsurance, you pay 20% of covered medical bills and your insurer pays 80%, until you hit your out-of-pocket maximum.

A federal law that lets you continue your employer-sponsored health insurance after leaving a job, usually for up to 18 months. You pay the full premium yourself (including the portion your employer previously covered), making it significantly more expensive than employer-sponsored coverage.

Auto insurance that pays for damage to your own vehicle when you hit another car or object, regardless of who was at fault. Required by most lenders if you have a car loan or lease.

Interest calculated on both the original amount and the accumulated interest from prior periods. In investing, this means your returns generate their own returns over time, producing exponential growth the longer money stays invested. In debt, it works against you the same way.

Auto insurance that covers damage to your vehicle from events other than collisions: theft, vandalism, hail, flooding, or hitting an animal. Often called "comp." Required by most lenders.

A fixed amount you pay for a specific medical service, like $25 per doctor visit, regardless of the total cost of the visit. Copays are set by your insurance plan and typically apply after your deductible is met.

A one-page document submitted alongside a resume that explains why you're applying for a specific role and what you bring to it. Even when optional, a strong cover letter can distinguish you from other candidates.

A product offered by credit unions and apps like Self where you make payments into a locked account and build credit history in the process. At the end of the term, you receive the funds. Designed for people with no or thin credit history.

A number from 300 to 850 that represents your creditworthiness based on your payment history, amounts owed, length of credit history, credit mix, and new credit. Affects your ability to rent an apartment, get a loan, and in some cases, get a job. Higher is better.

The percentage of your available credit you're currently using. If your limit is $1,000 and your balance is $300, your utilization is 30%. Keeping this under 30% (ideally under 10%) has a significant positive effect on your credit score.

The amount you pay out of pocket before insurance starts covering costs. In health insurance, a $1,500 deductible means you pay the first $1,500 of covered medical expenses each year. In auto or renter's insurance, it's what you pay per claim before the insurer pays the rest.

A driving approach that anticipates hazards and accounts for the mistakes of other drivers, rather than assuming everyone will follow the rules. Includes maintaining following distance, scanning ahead, and minimizing distractions.

Investing a fixed amount of money at regular intervals, regardless of what the market is doing. When prices are high, your money buys fewer shares. When prices drop, it buys more. Over time, this reduces the impact of market volatility and removes the temptation to time the market.

Money set aside specifically to cover unexpected expenses: a car repair, medical bill, or job loss. The standard recommendation is 3 to 6 months of essential expenses. A starter goal of $500 to $1,000 is enough to handle most minor emergencies without going into debt.

A type of investment fund that holds a collection of assets (like stocks) and trades on an exchange like a stock. Index ETFs track a specific market index, offering broad diversification at low cost. VOO and VTI are two popular examples.

A conversation HR typically conducts when an employee resigns, used to collect feedback about the job, management, and workplace. Optional in most cases. An appropriate place to share constructive feedback about systemic issues, not individual grievances.

A free service from the credit bureau Experian that adds on-time utility, phone, and streaming payments to your Experian credit file. Can help people with thin or no credit history build a score faster.

The federal form used to determine eligibility for grants, loans, and work-study programs for higher education. Opens October 1st each year for the following academic year. Filing early gives the best chance at aid.

The most widely used credit scoring model, developed by the Fair Isaac Corporation. Scores range from 300 to 850 and are calculated using payment history (35%), credit utilization (30%), length of credit history (15%), credit mix (10%), and new credit (10%).

A retirement savings account offered through an employer. Contributions come out of your paycheck before taxes, reducing your taxable income now. Many employers match contributions up to a percentage of your salary. Never pass up a match — it's free money.

A tax document your employer sends by January 31st showing how much you earned and how much was withheld for federal, state, and other taxes during the year. The primary document you need to file your taxes.

A form you fill out when starting a job that tells your employer how much federal tax to withhold from your paycheck. Filling it out accurately reduces the chance of owing money (or getting a large refund) at tax time.

A tax form used to report income other than regular wages. If you do freelance work, gig economy jobs, or receive other non-employment income, you'll typically receive a 1099. Unlike a W-2, no tax is withheld from 1099 income — you're responsible for paying it yourself.

The window between your credit card statement closing date and your payment due date, typically 21 to 25 days. New purchases made during this period don't accrue interest if you pay your full balance by the due date.

Your total earnings before any deductions: taxes, insurance premiums, retirement contributions, etc. What your employer pays you. Budget based on net pay, not gross pay.

A health insurance plan with a higher deductible and lower monthly premium than standard plans. Often paired with an HSA. Well-suited for generally healthy people who want lower monthly costs and the ability to invest through an HSA.

A type of health insurance plan that requires you to choose a primary care physician who coordinates your care. Referrals are needed to see specialists, and coverage is generally limited to in-network providers. Typically lower premiums and costs than PPO plans.

A tax-advantaged savings account available to people enrolled in a qualifying high-deductible health plan. Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are also tax-free. Unused funds roll over year to year.

A savings account, typically offered by online banks, that pays a significantly higher interest rate than a traditional bank savings account. Ideal for emergency funds or any cash you need to keep accessible. Rates fluctuate with broader interest rate conditions.

A category of federal student loan repayment plans that cap your monthly payment at a percentage of your discretionary income. Payments adjust if your income changes. After 20 to 25 years of qualifying payments, remaining balances may be forgiven.

An investment fund that tracks a specific market index, like the S&P 500. Rather than picking individual stocks, you own a small piece of every company in the index. Provides broad diversification at low cost, and historically outperforms most actively managed funds over the long term.

A short, low-pressure conversation with someone working in a field or role you're curious about. You're not asking for a job — you're asking for insight. One of the most useful and underused tools in career exploration.

A doctor, hospital, or specialist that has a contract with your insurance company, agreeing to charge negotiated rates. Seeing in-network providers costs you significantly less than out-of-network ones. Always confirm a provider is in-network before an appointment.

Insurance that covers costs you're legally responsible for when you harm someone else or their property. In auto insurance, this covers injuries and property damage you cause. In renter's insurance, it covers legal costs if someone is injured in your home.

The length of time you have to repay a loan. Longer terms mean lower monthly payments but more total interest paid over the life of the loan. Shorter terms mean higher monthly payments but less interest overall.

Optional auto insurance coverage that pays medical expenses for you and your passengers after an accident, regardless of who was at fault. Works alongside your health insurance. Typically inexpensive to add.

The smallest amount you can pay on a credit card bill to keep your account in good standing. Paying only the minimum keeps you out of default but allows interest to accumulate on the remaining balance, making debt significantly more expensive over time.

Your take-home pay after all deductions: federal and state taxes, Social Security, Medicare, health insurance premiums, and retirement contributions. Typically 20 to 30% less than your gross pay. Always budget based on net pay.

A state where each driver's own insurance covers their medical costs after an accident, regardless of who caused it. Reduces lawsuits but typically requires higher minimum coverage. A minority of U.S. states use this system.

A provision in an employment agreement that restricts you from working for a competitor or starting a competing business for a period of time after leaving a job. Enforceability varies significantly by state. Review yours carefully before resigning.

A doctor, hospital, or specialist that does not have a contract with your insurance company. Seeing one results in significantly higher costs, and some plans provide no coverage for out-of-network care except in emergencies.

The most you'll pay for covered medical expenses in a single year. Once you hit this number, your insurance covers 100% of further covered costs. Your financial worst-case ceiling for health spending in a given year.

A short-term, high-cost loan typically due on your next payday. APRs often exceed 300%. Should be avoided in almost all circumstances. Credit union emergency loans, payment plans, or borrowing from family are almost always better alternatives.

A formal evaluation, typically conducted once or twice a year, where your manager assesses your work, you discuss your contributions, and goals for the next period are set. A good time to ask for feedback, make the case for a raise, and clarify expectations.

A type of health insurance plan offering more flexibility than an HMO. You can see any doctor without a referral and go out-of-network, though at a higher cost. Generally carries higher premiums than HMO plans.

Your regular payment — monthly or semi-annually — to maintain an insurance policy, whether you use it or not. Applies to health, auto, and renter's insurance. A lower premium often means a higher deductible, and vice versa.

A federal program that forgives the remaining balance on federal student loans after 10 years of qualifying payments while working full-time for a government or nonprofit employer. Requires enrollment in an income-driven repayment plan.

An insurance payout method that covers what it costs to replace a damaged or stolen item with a new equivalent today, without factoring in depreciation. More expensive than actual cash value coverage, but significantly better protection.

An individual retirement account you open and fund yourself, independent of any employer. Contributions are made with after-tax money, but all growth and qualified withdrawals in retirement are completely tax-free. One of the best accounts available to young adults in a low tax bracket.

An index tracking the 500 largest publicly traded companies in the United States. Widely used as a benchmark for the overall U.S. stock market. Index funds and ETFs like VOO and SPY track it.

Money paid to a landlord before moving in, held to cover potential damages beyond normal wear and tear. Returned (in full or in part) at the end of a lease. Documenting the apartment's condition with photos before moving in is the best protection for getting it back.

A learning technique that schedules review of material at increasing intervals over time. Rather than cramming, you revisit information just before you'd naturally forget it. Apps like Anki automate the scheduling. Significantly more effective than rereading.

A framework for answering behavioral interview questions: Situation (set the scene), Task (your role), Action (what you did), Result (what happened). Keeps answers focused and concrete rather than vague.

The total amount owed on a credit card at the close of a billing cycle. Paying this amount in full by the due date means you pay no interest. Different from the current balance, which reflects transactions made after the statement closed.

A request for additional time to file your federal tax return, filed using Form 4868. Grants until October 15 to file. It does not extend the time to pay — if you owe money, you still need to estimate and pay by April 15 to avoid interest.

Money returned to you by the IRS when more tax was withheld from your paychecks throughout the year than you actually owed. It is not a bonus — it's your own money being returned. Adjusting your W-4 can reduce over-withholding.

The standard amount of time given to an employer before your last day when resigning. Provides the company time to begin finding a replacement and allows you to transition your work. Less than two weeks is sometimes defensible, but it's the professional baseline in most industries.

Auto insurance that protects you when the at-fault driver in an accident has no insurance or insufficient coverage to pay for your damages. Roughly 1 in 8 U.S. drivers is uninsured. Strongly worth having.

Company stock or stock options that have been granted but not yet fully transferred to you. Vesting schedules determine when ownership transfers, typically over 3 to 4 years. Unvested equity is forfeited when you leave a job before it vests.

The timeline over which employer contributions (like 401(k) matches) or stock grants become fully yours. A four-year vesting schedule might give you 25% ownership per year. Leaving before fully vested means forfeiting what hasn't transferred yet.

A tax form your employer sends by January 31st each year showing your total earnings and the amount withheld for taxes. The primary document needed to file your tax return if you're a regular employee.

A form completed when starting a job that tells your employer how much federal income tax to withhold from each paycheck. Updating it accurately when your situation changes helps avoid owing money or getting a large refund at tax time.