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Glossary



A
B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Glossary - A
ACCIDENTAL DAMAGE

Some contents insurance polices will allow you to claim for accidental damage. It is the damage done to your possessions by accident, for example, you spill a pot of paint over your carpet.

ACCOMMODATION
Where you live. This includes living with your parents, in a hostel, renting somewhere or buying on a mortgage.

ACCOUNT
This is the service provided by a bank or building society that holds money for you. A current account is an everyday account for money to be paid in or taken out – it helps you budget and manage your money and pay for things in a convenient and secure way. A deposit account is for savings.

ACCURATE FIGURE
If you believe an estimate on your electricity or gas bill is wrong, you can ask the electric company to send someone around to read the meter. They can even show you how to read the meter yourself, so you can phone up and give them an accurate reading in the future.

AER
Stands for Annual Equivalent Rate. This shows what the interest rate would be if the interest on savings were paid and added to savings at the end of each year. Actually interest is often paid more often, such as four times a year. The AER is worked out in a standard way so you can compare interest rates directly with each other. The higher the AER, the better the return is on your savings.

AFTER TAX
Means what you are left with after tax has been paid. You must pay tax on most types of income (such as interest from savings, earnings from your job and pensions), but everyone can have some income tax-free. In 2002 - 3, the tax-free allowance for people under age 65 is £4 615. Older people may get a higher allowance.

ALL-RISKS
This means that your possessions are covered by the contents insurance policy even though you have taken them outside your home.

A.M.
It means ‘ante meridiem´ which is Latin for ´before noon

ANNUALLY
Every year

APPLICANT
An applicant is a person who is applying for something.

APR
Is the Annual Percentage Rate. This tells you the cost of a loan, taking into account the interest you pay, any other charges and when the payments fall due. The cost is standardised as an annual percentage rate so you can easily compare the cost of one loan with another e.g. a loan with an APR of 15% is more expensive than one with an APR of 11%.

ATM
ATM stands for Automated Teller Machine. These are also known as ‘cash machines’. You can find them in many places including banks, shopping centres and railway stations. In order to be able to use an ATM you need a cash withdrawal card and a personal identification number (PIN).

AVAILABLE CREDIT
This is the amount of money the store card or Credit Card Company will lend you now. That is, your credit limit, take away the amount you have already borrowed. You can use this money to buy goods or as a loan.

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Glossary - B
BALANCE
Your balance is the amount of money you have in your account at any particular time or which you owe on your credit or store card. It will be shown on your statement.

BALANCE BROUGHT FORWARD
The balance that was shown on your last statement.

BANK
A commercial organisation that undertakes to provide a range of financial services, such as current and deposit accounts. Banks must be authorised to take your money.

BANK LOAN
You can borrow money from your bank for a pre-arranged interest rate.

BASIC BANK ACCOUNT
A service from a bank or building society which lets you pay in money, get cash out and pay bills. It doesn’t let you spend more than you have in your account, so there is no risk of going overdrawn and running up overdraft charges.

BIRTH CERTIFICATE
All children born in the UK are registered on the Government’s National Register of Births and Deaths, and issued an official birth certificate. It’s an important record of your identity. If your birth certificate is lost or stolen, report it to the police, and go to your nearest Register Office to apply for a new one.

BLOCK CAPITALS
If you are asked to write in block capitals it means you must write each letter of every word as a simple, clear capital LIKE THIS.

BOUNCED CHEQUE
A cheque that the bank refuses payment on because there is not enough money in the account of the person who wrote the cheque. The bank usually sends the cheque back to the person it was written out to (the payee). The cheque is marked ‘return to drawer’. When this happens you have to ask the person who wrote the cheque to give you cash instead or to put some money in their account.

BORROWING
Getting money from someone else that you intend to pay back. You might borrow informally from friends and family or take out a formal loan with a written agreement.

BUDGET
A plan of your spending.

BUILDINGS INSURANCE
This type of insurance pays out if the structure of your home is damaged. For example, it may cover you if tiles fall off your roof during a storm, or if your house is damaged by fire.

BUILDING SOCIETY
An organisation that is owned by its members, who are some or all of the customers saving with or borrowing from the society. They often offer a range of financial services and are similar to banks. Building societies must be authorised to take your money.

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Glossary - C
CALENDAR MONTH
The months on the calendar e.g. January, February etc. The calendar months are generally longer than 4 weeks.

CAPITAL
The amount of money you originally have, save or invest, before any interest, other return or loss is taken into account. It could also be an amount of money that you have borrowed.

CASH
Cash is the simplest way of buying something. It is not a good idea to send cash payments through the post, but you can pay bills such as gas and electricity in cash by using the Giro payment system available through post offices and banks.

CASHCARD
Cashcards, or cashpoint cards, are the simplest type of account cards. They can usually only be used at cash machines (with a personal identification number, or PIN) to withdraw cash, check your balance or print out a mini- statement.

CASHFLOW
A record of all the money coming into the business less all the payments as they are made, measured over a particular time.

CASH INFLOW
The receipts of your business. If your receipts are bigger than your payments, you have a net cash inflow.

CASH OUTFLOW
Payments out of your business. If your receipts are less than your payments, you have a net cash outflow.

CATALOGUE
Goods are shown in the pages of the catalogue. You can buy them on credit and pay in weekly or monthly installments. The goods will usually be delivered by post. The price of the goods in the catalogue may be more than the price in a shop.

CHARGES
Fees and interest which you have to pay, for example, when you borrow money or buy on credit.

CHEQUE
A written instruction to a bank. It can be used to pay you money. You can write out cheques to yourself to get money out of your account or to pay other people, if you have your own chequebook with your current account.

CHEQUE GUARANTEE CARD
A plastic card that is issued by a bank or building society and guarantees that the amount of money on any cheque you write will be paid whether or not there is enough money in the account. There is a limit to the amount that is guaranteed - £100 or £250 are common amounts.

Citizens Advice Bureau (CAB)
A local office where you can get help with a range of problems including your finances or debts. To find your local CAB look in Yellow Pages or ask at the Library.

CLEARING
Clearing is the time it takes for the bank to transfer money from one account to another. This is why you usually have to wait a few days before you can take out the money from your account from a cheque you have paid in.

COMPOUND INTEREST
Interest rates are usually compounded - so the amount paid on savings is based on the capital plus the interest paid so far (provided you have not taken anything out of the account). This also works for loans - so the amount you owe can increase dramatically over quite a small time.

COMPREHENSIVE POLICY
Comprehensive insurance is more expensive than a third party only policy because it provides cover for accidental damage to your own car in addition to the third party cover.

CONSUMER
When you buy something you are a consumer.

CONTENTS INSURANCE
You buy contents insurance to cover your possessions. Some policies will pay for damaged items to be replaced as new – although the insurer may send you a voucher for a set value for you to replace the item with one of your own choice at a certain store rather than give you the money. The amount you pay will depend on where you live, how big your house is and whether you have a lot of valuables.

COUNCIL TAX
Tax paid to the local council for local services. For example, libraries, police, local roads etc.

COST OF CALLS
Most telephone bills contain a breakdown of the cost of calls. This may include a list of the more expensive calls – international calls and calls to mobiles, for instance - as well as the date and time they were made. Read the breakdown on your bill carefully. It can help you work out: if a bill is correct; how you may be able to save money by phoning at off-peak times; and even if another service package may be more suitable for you.

CREDIT
An account that is ‘in credit’ means that there is some money in it that is available to be spent. If you obtain goods or services ‘on credit’ it means that someone (for example, a bank or credit institution) has given you the money to make the purchase - they have credited you with the money. You must pay the money back. If you do not pay your credit card on time or have a history of not paying back other loans, this will be shown on your file held by a credit reference agency. When shops or banks check your creditworthiness and see this information has been listed, you may find it very difficult to get a loan.

CREDIT CARDS
Credit cards are available from most banks, and allow you to borrow money up to a certain limit. When you buy something with your credit card, the amount you spend is added to your total borrowing. Every month you are sent a statement to show how much you have borrowed and how much you need to repay. If you don’t repay the full amount, you will start paying interest. You can also get money from cash machines with most credit cards, but this is also borrowed money, and will be added to your monthly bill. This can be very expensive as you start paying interest immediately.

CREDIT HISTORY
If you’ve had trouble paying loans before, or you have any court judgments against your name, you may find it difficult to take out a loan. Your name may be on a list of people with poor credit histories. You may find that the only lenders that will offer you a loan charge very high interest rates.

CREDIT LIMIT
The maximum amount the store card or Credit Company will lend you altogether at any time.

CREDIT REFERENCE AGENCY
An agency that holds information on adults. This information includes public records (e.g. Electoral Roll entries), credit account information (e.g. repayment records for loans, credit, mortgage, hire purchase) and records of credit checks that have previously been made.

CREDIT RECORD
Your details held by a credit reference agency. It will include whether you appear on the Electoral Roll, your name and address from the Electoral Roll, how you have handled previous credit, and any other credit checks made about you.

CREDIT RISK
The chance that you might not repay your loan or credit.

CREDIT SCORE
A score given by a shop or credit agency based on your personal and financial circumstances. It helps them to decide whether you are likely to repay the loan you are asking for.

CREDIT UNION
A non-profit making co-operative savings association that makes loans to its members at low interest and encourages saving.

CREDITORS
A creditor is someone to whom a debt is due. This word is often used to describe the person that lends you money.

CURRENT ACCOUNT
A bank or building society account which helps you to manage your money, pay bills, receive money and keep money secure. It will have more services than a basic bank account, for example, you will get a cheque book.

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Glossary - D
DATE OF BIRTH

Your date of birth is the day, month and year you were born. If you are asked to present your date of birth in numbers, always begin with the day, then state the month, then the year. For instance if your date of birth is 5 February 1972, write 05/02/1972.

DEBIT
Money which is taken out of an account is ‘debited from’ that account.

DEBIT CARDS
Debit cards can be used to pay for many things without using cash or a cheque. Some are multifunction cards which can also be used in cash machines to take money out of your bank account, and to guarantee cheques. (If you use your card to guarantee a cheque, the person you pay your cheque to knows it will be honoured by the bank.) When you make a payment or withdraw cash with your debit card, the money is taken straight out of your account electronically. You cannot borrow money on a debit card. Useful when paying in shops, shopping by phone or on the internet.

DEBT
If you are in debt you owe money to someone e.g. a bank.

DEBTOR
A person who owes money.

DELETE AS APPLICABLE
To delete is to remove something. On a form, to delete something would mean to put a line through it. Delete as applicable means ‘cross out the things that do not apply to you’.

DEPENDANTS
People who are financially dependent on you for their livelihood. This is usually children who live with you, but it could be elderly relatives or someone you care for.

DEPOSIT
An amount of money paid by you to make sure you get the goods. You may need to pay a deposit when getting goods on credit.

DEFAULTED
Failed to make payments; or failed to pay off the debt.

DIRECT DEBIT
An arrangement where you instruct the bank to release money from your account to pay bills and other amounts automatically. The billing company requests the money from the bank directly. You are told in advance in writing how much will be taken and the date it will be taken out of your account.

DETAILED READING
This means reading carefully to aid understanding. When you are reading for information, you should usually scan the text first. Some texts, such as instructions, need to be read in detail throughout.

DISCOUNT
Money which is taken off the price of something. You may need to collect coupons or vouchers before claiming the discount. Sometimes shops give a discount to their employees.

DORMANT
No longer used.

DRIVING LICENCE
Full driving licences are issued by the Government when you pass your driving test. Previously, driving licences did not contain a photo, but all new licences are now issued with a photo, to help prevent crime. If you have an old-style licence you can apply to the DVLA to get one in the new format. If your driving licence is lost or stolen, you should report it to the police.

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Glossary - E
ELECTORAL ROLL
A list of names and addresses of people over 18 in the UK. You are required by law to register to be on the Electoral Roll. You can then vote in elections. The Electoral Roll is checked when you make an application for credit.

EMPLOYEE
Someone who is paid to work for someone else. The person who you work for is your employer.

EMPLOYEE NIC
Stands for employee National Insurance Contributions. This is a form of additional taxation and will be taken off your pay before you get it. You usually need to make contributions before you can claim certain state benefits, such as State Pension when you retire.

ESTIMATE
An estimate is an educated guess. An electricity or gas company will work out an estimate on the basis of how much electricity or gas you have used at this time of year in the past. Look at the ‘meter readings present’ column on one of your bills. It may have an ‘E’ before the number. This means the figure on this bill is an estimate. There will usually also be some information on the bill telling you whether your bill has been estimated.

EXCLUSION
Almost all insurance policies have exclusions. These describe events that are not covered by the policy.

EXPENDITURE
Your expenditure is the money you spend. It includes things like:

• rent/mortgage
• council tax
• food
• water, gas and electricity
• telephone
• transport
• child care
• TV licence
• mobile phone
• catalogue repayments
• clothes and shoes
• household items
• loan/credit card repayments
• car tax
• car insurance
• household insurance
• alcohol/cigarettes
• other expenses

EXPIRES
On plastic cards - after this date your card cannot be used.

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Glossary - F
FEE

A sum of money you pay, for example, to have a loan or credit arranged for you.

FINANCE COMPANY
A company which makes money by lending to people who want to buy goods on credit. Most shops use finance companies for their credit deals.

FINANCIAL
To do with money.

FINANCIAL ADVISER
An individual or firm that can assess your financial needs, recommend suitable products, and arrange for you to buy or invest in these products. Some advisers can also manage investments for you. Where advice concerns ´packaged products´ (such as unit trusts, open-ended investment companies, investment trust savings schemes, investment-type life insurance and pensions), an adviser must normally be either:

  • tied to a single product provider, or
  • independent and able to recommend any product on the market.

An adviser must be authorised by the Financial Services Authority (FSA).

FINANCIAL RECORDS
These will include statements, bills, receipts etc.

FINANCIAL SITUATION
Your financial situation refers to how much money you receive in wages and/or benefits and how much money you have saved up. It also includes how much money you owe and any financial arrangements you have made for the future, such as a pension. Sometimes people will also ask you about your regular outgoings, such as the amount you pay in rent.

FIRST £50 OF DAMAGE (ALSO CALLED AN ´EXCESS´)
Some contents insurance policies ask you to pay the first £50 (or other amount) of the cost of the damage. The insurer will then pay for anything more than this.

FIXED INTEREST RATE
Interest rates can go up and down. A fixed interest rate account means that you are guaranteed that the interest you get will stay the same.

FORENAME
Your forename is your first name. For instance, Nigel Parker’s forename is Nigel.

FREE BUFFER ZONE
Some bank or building society accounts have a buffer zone (a free temporary overdraft) so you can take this money out. You will not be charged for being very slightly overdrawn on this basis.

FREE FROM INCOME AND CAPITAL GAINS TAX
Saving in these accounts means that you will not pay tax on the interest your money earns.

FULL NAME
Full name refers to your first name, any middle name or names and your surname. For instance, Nigel Matthew Parker

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Glossary - G
GROSS
Indicates an amount from which certain items have yet to be deducted.

GROSS INTEREST
Interest on savings before any tax is taken off.

GROSS PROFIT
In a business - the money you make from selling your goods and services less the cost of materials or making the goods.

GROSS PAY
Your pay before anything is taken away from it, like income tax and National Insurance Contributions.

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Glossary - H
HEALTH INSURANCE
There are many types of health insurance – some give you a lump sum if you become ill, others pay you a regular income while you can’t work. Some health insurance pays for your treatment at a private hospital – and lets you jump the waiting list.

HIRE PURCHASE
You take away the goods and can use them. You have to make regular payments and after a set length of time, when the goods have been paid for, the goods will become yours. Cars are often bought this way. You would not own the car until you have completed the hire purchase agreement - so you would not be able to sell the car until you had paid for it.

HONOUR A CHEQUE
A bank honours a cheque by paying out the money as you have requested. A cheque will only be honoured when it has been guaranteed or there is enough money in the account, or you have an agreed overdraft.

HONOURED
A bank honours a cheque by paying out the money as you have requested. A cheque will only be honoured when it has been guaranteed or there is enough money in the account, or you have an agreed overdraft.

HOW MUCH YOU BORROW
Some lenders alter the interest rate according to how much you borrow.

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Glossary - I
IDENTITY

Your identity is who you are. You may be asked to show documents that prove that you are who you say you are. There are lots of different documents that can be used as proof of your identity, for instance your birth or adoption certificate, a valid passport or a marriage certificate. Any papers that show your address, date of birth or photo may be useful. The official you are talking to can give you a full list of documents that you can use.

INCOME
Your income is the money you have coming in. It includes things like wages, benefits (like income support or child benefit) and child maintenance payments.

IN CREDIT
‘In credit’ means that there is money available to spend in the account.

INDEX-LINKED
Index-linking means that the value of the financial product or service (e.g. pension, savings certificate) is increased in line with an index (e.g. the Retail Price Index, or inflation). With some types of contents insurance the insurer works out how much you need to increase your cover by each year.

INSTALMENTS
Weekly or monthly repayments made to pay off goods bought on credit or to pay off a loan taken out to buy them.

INSTANT ACCESS
Means you can get your money back immediately without having to wait for any notice period.

INSURANCE COVER
Insurance cover describes the situations you are insured against. For example, if you have a car you might have comprehensive cover or only be covered for third party, fire and theft.

INSURANCE PREMIUMS
This is the money you pay to the insurance company to make sure you are covered. Some premiums are paid monthly; others are paid quarterly or annually.

INTEREST
The reward you get for lending your money to say, a bank or a building society. Also the cost you pay when you borrow money through a loan or credit agreement. It is usually worked out as a percentage of the money you have borrowed. For instance, if an interest rate is 10 per cent and you borrowed £100, the interest you have to pay will be 10 per cent of £100, or £10.

INTEREST RATES
This is the percentage that is paid on savings or loans. For example, a savings account offering an interest rate of 10% would give you a better return than one offering 5%. Similarly a loan with an interest rate of 20% will cost more than one with a rate of 15%.

ISA
ISA means Individual Savings Account. You do not have to pay tax on the gains or income from an ISA. You may not have a mini-ISA and a maxi-ISA in the same tax year. You can pay an overall total of £7,000 into ISAs each tax year. You can choose to put your money in up to three mini-ISAs or into one maxi-ISA each year. These limits may change. A maxi-ISA is an account (or ´wrapper´) in which you can hold a wide range of savings and investments products. These must include stocks and shares and may also include savings accounts and life insurance. You can put up to £3,000 into the cash component of your maxi-ISA, up to £7,000 into the stocks and shares component of your maxi-ISA and £1,000 into the life insurance component of your maxi-ISA. However, you must not exceed the overall total of £7,000 paid in any one tax year. With a mini-ISA you can hold cash, or stocks and shares, or life insurance. You can have up to 3 mini-ISAs in any one tax year made up of three different types of holding. The maximum you can pay into a cash ISA is £3,000, in a stocks and shares ISA is £3,000 and in a life insurance ISA is £1,000. A mini-cash ISA is a savings account that pays tax-free interest. You can save up to £3,000 in a mini-cash ISA in any one tax year.

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Glossary - J
JOINT ACCOUNT
This is a bank account owned by two or more people. For example, you could have a joint account with your partner.

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Glossary - L
LEGAL STATUS
Your legal status can refer to whether you are married, single, divorced, widowed or separated. Sometimes it can refer to whether you are a citizen of the UK and whether you have a right to work in this country.

LIFE INSURANCE
This type of insurance pays out a lump sum to your family if you die. It is necessary, for example, if you are paying an interest-only mortgage. With a life insurance plan, the insurer will pay off the mortgage with a lump sum if you die before you’ve paid it off. You can insure for more than the cost of the mortgage to make sure that your family has some money to live on as well.

LOAN
A sum of money which you borrow, usually with interest.

LOAN SHARK
Someone who lends money and charges a very high rate of interest. They will not hold a consumer credit licence.

LOYALTY CARDS
Loyalty cards are offered by some shops and supermarkets to encourage people to shop there. You cannot usually use your loyalty card to pay for anything, but every time you spend money at that shop you will be given ´points´ on your card. When you have saved enough points, you may be able to use them to get vouchers to help pay for your shopping, or perhaps other things such as air-miles.

LUMP SUM
A lump sum is a one-off payment. Some people have insurance policies that pay a lump sum if they have an accident or are ill. Other people prefer to have a policy that provides an income over a long period of time.

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Glossary - M
MAXIMUM WITHDRAWAL

Most cash machines check your bank account before giving you any money and will not give you any more than there is in your account. There is often a limit of, say, £250 per day on your withdrawals.

MINI-ISA OR CASH ISA
ISA means Individual Savings Account. A savings account that pays tax free interest. You may not have a mini-ISA and a maxi-ISA in the same tax year. You can save up to £3000 in a mini-cash ISA in any one tax year. This limit may change.

MINIMUM PAYMENT
On credit or store card statements - the minimum amount you must pay each month off your debt.

MONEY
Money is an exchange. It is accepted as a payment for goods or services.

MORTGAGE
A loan usually taken out to buy property e.g. a house. If you do not keep up the mortgage repayments the mortgage company can repossess your house. This is an example of a secured loan. The loan is secure for the mortgage company because they can not lose out. They get the value of your house if you default on the loan.

MOTOR INSURANCE
There are two types of motor insurance. Third party insurance is the minimum insurance cover required if you drive a car on public roads. You may prefer to also take out a comprehensive policy for your car.

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Glossary - N
NATIONAL INSURANCE

This is the code on the plastic card you’re given just before your 16th birthday. Your employer gives the number to the National Insurance Contributions Agency of the Government, so that it can deduct money from your wages to pay for benefits that you might need to claim, like Incapacity Benefit, and your state pension when you retire. If you don’t have one, you can go to your nearest Social Security office to apply.

NET
Indicates a sum of money from which certain amounts have already been taken away.

NET INCOME
Your net income is the total you earn in a week, month or year after any deductions for tax and National Insurance.

NET INTEREST
This is interest which has already had the tax taken off it.

NET PAY
The pay you actually get. All the deductions have been taken off before you get it.

NET PROFIT
In a business - the gross profit less the overheads of the business measured over a particular time.

NEW DEAL
The New Deal for Lone Parents is a special scheme that helps single parents get back to work if they wish to. If you want to get a qualification to help you find work, the New Deal may offer you help with childcare costs while you are studying. You can find out more about the New Deal for Lone Parents from your local Job Centre.

NON-PRIORITY DEBTS
Less important debts. The people you owe the money to can take you to court to recover the debts but cannot take any other action (such as cutting off a service or repossessing your home). They are likely to accept reasonable repayments.

NOTICE
The time you must wait to get your money after telling, say, your bank or building society that you want to take it out. If you don’t wait this time you may be penalized by, for example, losing interest.

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Glossary - O
OCCUPATION

Your job, work or profession e.g. bricklayer, checkout operator, teacher.

OCCUPATIONAL PENSION
A pension from a scheme set up by an employer, for example, a Local Council Pension or a Teacher’s Pension. Employees have to join the scheme to be eligible and may have to make contributions towards the pension. The scheme may pay a fraction of the final salary as a pension (calculated taking into account the number of years worked) or build up a cash fund used to buy an annuity. An annuity is a special type of investment which can pay out a regular sum over the lifetime of the owner.

OFFICE USE ONLY
Office use only refers to information on a form that need not concern an applicant, or information to be added by someone other than an applicant.

OVERDRAFT
If you spend more money than you have in your current account you will go overdrawn. You can ask the bank if they can arrange to lend you some money for a short time. This is known as an arranged overdraft. You pay an agreed rate of interest on the overdraft. If you go overdrawn without asking the bank in advance, they might refuse to pay your cheques and charge you a high interest rate on the money that you owe them.

OVERHEADS
The costs of running a business. It includes things like rent, office help, heat & light, advertising and distributing your goods and services.

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Glossary - P
P45

This is the document that your employer has to give the tax office so that the right amount of tax can be deducted from your earnings. All employers are required by law to give you a P45 when you leave a job.

PAY IN
Putting money into your account. This could be cash or cheques.

PAYING-IN SLIP
A paying-in slip is a form that needs to be completed when you pay money into your account. You can use it to pay in cash, cheques, or both at the same time. Your bank or building society gives you a book of paying-in slips when you open the account, and there are usually some at the back of your chequebook as well.

PAYMENTS
Money you pay out, for example, on materials you need for your business, interest on loans, money for services such as gas & electricity.

PAYMENT RECEIVED
A sum of money paid into your account to pay off credit, a loan or for services such as gas and electricity. This will be shown on your statement.

PAY PERIOD
The year is divided into equal pay periods starting from early April (which is also start of the tax year). If you are paid monthly, there are 12 pay periods; if weekly, 52.

PASSPORT
A passport is a legal document that you must show when you travel to other countries. Passports are a good form of identification, because they are an official Government record of your identity, and they contain your photo. Your passport will only be accepted as a form of ID if it is valid – that is, as long as it is current (passports have to be renewed every ten years) and the details are all correct. You can apply for a passport by getting an application form from your local Post Office – new passports cost about £30 for adults. If your passport is lost or stolen, report it to the police. The application form for a passport is complicated to fill in so you may want to pay a little bit extra and go to your local Post Office who will check you have filled it in correctly.

PAYEE
The person the money is being paid to when you write out a cheque.

PENSION
An income paid out after someone retires. The government gives tax relief on money paid into a scheme designed to provide a pension. A pension is a ‘locked box’ form of savings because you cannot spend any money in the fund until you have reached the minimum age (often 50). You can often take part of the proceeds as a cash lump sum but the rest must be taken as income. There are different types of pension schemes: occupational; Stakeholder; State; personal.

PENSION DEDUCTION
Payments into a pension scheme will be taken automatically from your pay, if you pay into a pension scheme which is arranged by your employer. This will show up on your pay slip as ´pension deductions´

PER ANNUM
Each year.

PERSONAL PENSION
A pension plan, not tied to a particular employment, that you can keep going even if you change job. You might have set up the plan yourself direct with a pension provider or it could have been arranged through your workplace. Some personal pensions are Stakeholder schemes.

PERSONAL LOAN
Many different companies offer personal loans. These are usually loans that you can use to pay for whatever you want. But as with all loans, make sure you check the interest rate and conditions first.

PET INSURANCE
Vets’ bills can be very expensive – so some people like to take out insurance against their pet falling ill. Premiums start at just a few pounds each month – but get more expensive as your pet gets older, just as with humans.

PHONE SERVICE PACKAGES
Most phone companies offer different service packages to suit different customers’ needs. These may offer different rates for national and international calls, for instance. Most have trade names like BT Together.

PIN
PIN stands for Personal Identification Number – a four-digit number for you to memorise and keep secret, which you use with a cash machine card. The PIN is for security. It’s like an electronic signature – it identifies you and stops anyone else using your account. Never keep your PIN with your card (it’s best not to keep it written down at all), and never tell it to anyone else – not even bank staff.

P.M.
It means ´post meridiem´ which is Latin for ´after noon´.

POLICY
Policy is another word for plan or cover. When you take out an insurance policy, you receive a contract from the insurance company telling you the kind of events you’re covering yourself for, and how much money the company is prepared to pay out.

PREMIUM
The amount you have to pay to buy the insurance. You may be able to pay in monthly installments.

PRIORITY DEBTS
These are debts which are more important than others because the law lets the people (you owe the money to) take serious action against you. Priority debts include things like a mortgage because your home could be repossessed if you do not keep up your mortgage repayments and fuel bills because your gas or electricity could be cut off.

PROFIT AND LOSS
In a business, you make a profit if you sell goods or services for more than your costs. You make a loss if the proceeds are less than your costs.

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Glossary - R
QUARTERLY STATEMENTS

Statements are written records of how much money you have in your account. The bank sends them to you automatically. A quarterly statement comes every 3 months.

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Glossary - R
RECEIPTS

Money coming in, for example, from selling goods and services or taking out a loan.

REPAYMENTS
The sums of money you pay back weekly or monthly on your loan or credit.

RETURN
The amount you get back on your capital. A general rule is that the higher the return the more risky the investment.

RESPONSIBILITIES
What you should do e.g. finish paying for goods taken out on credit.

RIGHTS
The protection that is given to you by law. For example, you have a right to compensation if your bank goes bust and you lose money.

RISK
Another name for chance or uncertainty. Types of risk include capital risk (your savings or investment fall in value), interest rate risk (the interest rate you agree to may not be good value in the future) and inflation risk (price levels will rise so the buying power of your savings or investments will fall). Shares and share-based investments, such as unit trusts, are considered higher risk because the value of your investment can fall (capital risk) but growth of these investments tends to outstrip inflation and over the medium- to long-term usually beats the return from savings accounts.

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Glossary - S
SAVINGS

Any money you put aside for future use. This may be in a deposit account – or under your bed. ‘Rainy day’ savings are useful for emergencies and need to be easily accessible, while longer-term savings can be built up to give a ‘nest egg’.

SAVINGS ACCOUNTS
Savings are often kept in bank, building society or National Savings accounts. The amount you put in does not fall in value but may grow as interest is added.

SAVINGS GATEWAY
A scheme which is being piloted by the government. It encourages people who would not normally save to put something by because their savings are matched by money from the government. There are strict rules about who can benefit from the scheme and how much money they can save.

SCAN
Scanning is used to locate specific information. It involves running your eye over the text to look for keywords.

SECURED LOAN
A secured loan means that the loan amount is being borrowed against the cost of something you own. This way the lender can be sure that if you can’t make the repayments they’ll get their money back. For example, some homeowners borrow money against their houses. This means that if they can’t make the payments their house may be reprocessed by the lender.

SHARES
An investment which makes you part-owner of a company, along with all the other shareholders. Some shares pay you an income (called dividends) regularly. With all shares, you accept a capital risk. This means, if the share price rises, you will make a profit when you sell, but if the share price falls, you will instead make a loss.

SHORT TERM
Usually means a period of time no longer than, say, five years - and often a lot shorter.

SIGNATORY
A signatory is a person who signs a document. For instance, if you are making an application and sign a form, you are the signatory.

SKIM
Skimming is reading quickly to find out what the text is about. Skimming can also take in features such as headings, subheadings and illustrations to obtain an overview of the subject matter.

SOLO, ELECTRON
Types of debit card where your account is always checked to see whether there is enough money to pay for the goods. Your account cannot go overdrawn if you use these types of debit card.

STANDING ORDER
A method of paying regular amounts automatically. You instruct your bank to pay the money for you to a particular person or company. It’s your responsibility to change the payment if it needs to alter.

STAKEHOLDER
A type of pension scheme designed to be good value for money by having low charges, flexible payments and so on. Usually it means a personal pension that meets these conditions, but some types of occupational scheme can also be Stakeholder schemes.

STATEMENT
A document from the bank or building society which shows all your recent payments into and withdrawals from your account. You should check it with your own records.

STATE PENSION
A pension paid to you when you retire by the State. The amount you get will depend on your National Insurance record (or on that of your marriage partner).

STOCK MARKET
Where stocks and shares are bought and sold.

STORE CARDS
Store cards are like credit cards, but are available from shops rather than banks. They can only be used to buy things at particular shops. Anything you spend on your store card is borrowed money. If you do not pay off the full amount each month you will start paying interest on it.

SURNAME
Your surname is your last name or family name. For instance, Nigel Parker’s surname is Parker.

SWITCH, VISA DEBIT
Types of debit card. Your account may be checked if you are paying out a large amount but not always. This means that it is possible for you to go overdrawn on your account.

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Glossary - T
TAKE HOME PAY
The money you actually get paid after deductions such as income tax and National Insurance Contributions.

TAXATION LOCAL
You may pay local taxes such as Council tax. This money is used to pay for local services such as libraries and the police.

TAXATION NATIONAL
You are taxed in a variety of ways, for example, by paying income tax on your wages, by paying VAT when you buy certain goods, by paying the road fund licence for a car. These taxes are used to finance services such as the National Health Service, Armed Forces and education which are of benefit to everyone.

TAX CODE
This code, with special tables, tells your employer how much tax-free pay to give you each pay period. Your tax code is worked out from your tax allowances and other tax adjustments.

TAX THIS PERIOD
Shown on a pay slip - how much income tax you have to pay this pay period. It is worked out from tables using your tax code.

TAX YEAR
A 12 month period running from 6th April one year to 5th April the next year. Taxes, such as income tax, are worked out over this period.

TENANT
Someone who rents where they live.

TERM
The time for which something lasts e.g. how long you have to pay back a loan.

TERM OF THE LOAN
Generally, the longer the period you borrow the money for, the lower the interest rate. But this will still add up over the time that you’re paying the money back.

THIRD PARTY INSURANCE
Third party insurance means that your insurance company will pay out if you accidentally cause damage to another person or their car. Adding in ‘fire and theft’ means that your car is covered should it be stolen or damaged by fire.

TOTAL DEDUCTIONS
On a pay slip - this is the total amount that will be taken from your gross pay. What is left after this is your take-home pay.

TRANSACTION
Any payment in or out of your account.

TRAVEL INSURANCE
When you travel abroad you may want to take out travel insurance. Many countries will not treat you if you have an accident or fall ill unless you can pay – and medical bills can be extremely expensive. Some travel insurance policies will cover such events as the cost of flying you home if necessary, reimbursement for lost luggage or cancelled flights. As with all insurance policies, it is important to understand exactly what is covered.

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Glossary - U
UNSECURED LOAN

An unsecured loan is the name for a loan that does not use anything you own as security. Therefore you cannot lose your home directly if you don’t make the payments – but you can be taken to court and end up having to pay back the money. Your ‘credit rating‘ may also be affected if this happens – this means that most financial companies will refuse to lend you money.

UTILITY BILLS
The bills for electricity, water, gas and telephone.

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Glossary - V
VOLUNTARY EXCESS

You can get a reduction in your insurance premium if you agree to pay the first part of every insurance claim yourself. The insurer will then pay for anything more than this.

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Glossary - W
WHO YOU BORROW FROM

High street banks and building societies are competing with each other to lend you money. The interest rates they charge are set by market forces.

WITHDRAW
Take cash out of your account.

WORKING FAMILIES TAX CREDIT
The Working Families Tax Credit is a new way for working parents to claim financial support from the government. The amount of help you can get depends on your income, how many children you have and whether you have to pay for childcare. You can find out more about the Working Families Tax Credit from your local Benefits Agency Office, New Deal Adviser, Job Centre or Tax Enquiry Office.

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This glossary is based on the glossary used in the FSA framework provided with the kind permission of the FSA (Financial Services Association).

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