common financial terms

9 Common Financial Terms That You’ll Come Across As A Student

Pop Quiz: What’s one topic that you’ll be using throughout your life, but hasn’t been taught to you? The answer to this is financial literature. Invariably, in one way or the other, there are certain financial terminologies that you’ll come across, and standing blank at such situations is not going to do you any good. If there’s one subject that has the ability to impact you throughout your entire life, it’s personal finance. Unfortunately, it’s a subject that no one wants to teach you. But with self-help guides on common financial terms like this, you can start getting a hold of the basics of financial literacy that every student should know. Trust me, it’ll be useful for you, now as well as in the long run.

Financial Terms Every Student Should Know

Anyone who begins reading financial news will need a brief tutorial on the concepts that are often used. To help you comprehend what you read, we’ll go through common financial terms you’ll find in the economic trends, especially when a corporation discloses its earnings—along with where you’ll see them, what they represent, and what they mean for the firm. Not just that, these phrases will help you understand the value of personal financing and the concept of budgeting, investing, and this will eventually give you an idea of how well you can finance your studies abroad.

#1 Annual Percentage Rate (APR)

In order to fund your study abroad expenses, you may have applied for an education loan. The annual percentage rate or APR is the amount of interest that is charged to you annually for borrowing the loan, expressed as a single percentage. It simply indicates how much interest money you will have to pay over the course of a year.

#2 Asset

If you’re a student specializing in commerce or business studies, ‘asset’ must have been one of the most common financial terms that you must have come across. Simply put, an asset is any resource (tangible or intangible) that holds a certain value that can be converted into money. An individual, company, or country can own or control assets, which include things like cash, investments, art, technology, real estate, and intellectual property.

#3 Bankruptcy

Bankruptcy is one of the most important business and finance terms you should know if you’re into reading about a company’s financial position. When a person or business is unable to repay their debts, they can declare bankruptcy. Bankruptcy protects debtors from debt collection but also compels them to sell their possessions to repay what they owe.

#4 Credit

Let’s all face it, credit is one of the most common financial terms that every student must have uttered at least once in their university life. Credit is a financial arrangement in which money is borrowed for purchase and repaid later. It enables consumers to make purchases that they would not be able to buy if the whole amount had to be paid in one installment. Common forms of credit include loans and credit cards.

#5 Creditworthiness

Creditworthiness is a term that refers to how much confidence a lender can have in a borrower’s ability to repay a loan. Creditworthiness is primarily determined by how well a borrower has managed previous debt obligations.

If you’re an international student who requires financial aid and wishes to apply for an education loan, make sure you fill out the form in this blog.

#6 Default

When a borrower is unable to satisfy the requirement of debt repayment, he or she enters into default. One of the most common financial terms, default is the second and most significant stage of nonpayment, following delinquency. When a loan goes into default, the lender usually reports it to credit bureaus and sells the debt to a collection agency.

#7 Interest

Amongst the most common financial terms for newbies, ‘interest’ is something that cannot be missed. Lenders charge borrowers interest as a fraction of the loan principal. Simple interest and compound interest are the two main types of interest. Simple interest is calculated just on the amount borrowed at the outset, whereas compound interest is calculated on the loan principal plus the interest that accumulates each period.

#8 Principal

As simple as it can get, principal refers to the amount of money due on a loan before interest.

#9 Time Value Of Money

The notion of the time value of money, or TVM, states that money accessible now is worth more than money available later. This is due to the fact that money invested has the ability to grow, and the longer it is invested, the more it values. Money received later has less time to develop through investments and is consequently regarded as less valuable.

Thank you for reading this blog on the common financial terms every student should know. If you’d like to read more, here are some blogs that might be of interest to you:

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Pareeshti Rao

It all started with an impulsive urge to befriend Enid Blyton and be a part of the famous five! Writing since then has been my magic wand and I've used it to sprinkle words like fairy dust and express myself thereat.

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