401(k)
A US employer-sponsored retirement account. Contributions reduce current taxable income; growth is tax-deferred.
Plain-language definitions of 37terms you'll see throughout the app. Click any letter below to jump.
A US employer-sponsored retirement account. Contributions reduce current taxable income; growth is tax-deferred.
A budgeting guideline: 50% of take-home to needs, 30% to wants, 20% to savings and debt payoff.
The yearly cost of borrowing money, expressed as a percentage. Includes interest and standard fees.
Example
A credit card with 22% APR charges roughly 1.83% (22÷12) each month on unpaid balances.
A debt payoff strategy that attacks the highest-interest-rate debt first, then rolls payments into the next-highest.
Example
With 22% CC, 15% loan, 6% car — pay the CC first, then the loan, then the car.
A plan for how to spend, save, and invest your income over a specific period — usually monthly or per income deposit.
The movement of money in and out of your accounts over time. Positive cash flow means more in than out.
Interest earned on both your original investment and the interest already accrued. Makes money grow faster over time.
Example
$1,000 at 7% compounded annually is $1,070 after year 1, $1,145 after year 2 — that extra $5 is interest on the $70.
The projected month you'll eliminate all debt based on your current payments and strategy.
Your monthly debt payments divided by your gross monthly income. Lenders use it to assess risk. Below 36% is typically healthy.
Non-essential spending: dining out, entertainment, hobbies, subscriptions. The part of your budget you can cut most easily.
Cash reserved for unexpected expenses. A starter fund is $1,000; a full fund is 3-6 months of essential expenses.
Money your employer contributes to your retirement account based on your own contribution. Free money — capture it.
Example
A "100% match up to 5%" means for every 5% of salary you contribute, your employer adds another 5%.
A Canadian tax-advantaged account for first-time home buyers. Contributions are tax-deductible and growth is tax-free.
Recurring costs that don't change month-to-month: rent, mortgage, car payment, insurance.
A US tax-advantaged account for medical expenses, available with high-deductible health plans. Triple tax advantage.
A payment from your employer or other income source. Payday Audit budgets per deposit rather than only monthly so the plan matches reality.
The cost of borrowing money (on debt) or the reward for lending it (on savings and investments). Expressed as a rate.
What you owe. Credit card balances, loans, mortgages, student debt. The "minus" side of net worth.
The gradual increase in spending that happens as your income grows. Small upgrades that add up and erode savings potential.
The smallest amount you're required to pay on a debt each month. Paying only the minimum is the slowest (and costliest) way out of debt.
The amount that actually hits your bank account after taxes, retirement contributions, insurance, and other deductions.
Example
A $5,000 gross income deposit might become $3,700 net after taxes and deductions — $3,700 is what you budget.
Your assets minus your liabilities. A single number that tracks your overall financial progress.
Example
Assets $50,000 (cash + retirement) − Liabilities $12,000 (credit card + loan) = $38,000 net worth.
The original amount of a loan, separate from interest. When you pay extra, it goes toward principal and reduces future interest.
The life stage after you stop earning active income. Your investments and savings fund living expenses.
A US tax-advantaged retirement account. Contributions are after-tax, but growth and withdrawals in retirement are tax-free.
A Canadian tax-advantaged retirement account. Contributions reduce current taxable income; growth is tax-deferred until withdrawal.
The percentage of your take-home pay that goes to savings and investments. A higher rate means a faster path to financial independence.
Example
A 20% savings rate on a $4,000 income deposit is $800 toward savings + investments each deposit.
Income beyond your primary job — freelance work, a side business, gig work. Usually taxed as self-employment.
Money set aside over time to cover a known future expense. Annual insurance premiums, vacation, vehicle maintenance.
Example
Saving $100/month for 12 months so you have $1,200 ready when your annual car insurance bill lands.
A debt payoff strategy that attacks the smallest balance first for quick wins, then rolls payments into the next-smallest.
Example
With $500, $3,000, and $8,000 debts — pay off the $500 first regardless of rate, then tackle the $3,000.
Same as net pay — what you actually receive after deductions.
A retirement or savings account with tax benefits: deductible contributions, tax-deferred growth, or tax-free withdrawals.
A Canadian account where contributions are after-tax but growth and withdrawals are tax-free. Flexible for any goal.
Costs that change month-to-month: groceries, utilities, gas, dining out. Plan a realistic average.
The long-term process of growing net worth through saving, investing, and paying off debt. Compounds over decades.
Money your employer takes out of each income deposit to pre-pay your taxes. Your refund (or bill) at tax time depends on whether withholding matched what you actually owe.
A budgeting method where every dollar is assigned a purpose before you spend it, so "income minus allocations" equals zero.