When it comes to managing money, it is important to know the financial terms that come with the territory. Nearly every financial decision you make, from stock investing to homebuying to preparing your income taxes to life insurance, comes with specific terms. And it is important to know what they mean. Financial terms like points, diversification, tax deductible and whole life insurance all have specific implications for your financial situation.
Before you commit to any financial decision, and before you start shopping around for anything that impacts your personal finance situation, get an idea of what various terms mean. For instance, it matters whether or not your contributions to a retirement account are tax deductible. And there is a big difference between whole life insurance and term life insurance. And those points on your home loan? Are they discount points or origination points? How these questions are answered will directly impact how much money you spend or save, and the kinds of decisions you make. Be sure to understand all of the financial terms you encounter before you make a commitment.