Money talks

What's your net worth? 10 financial terms everybody should understand

Published on July 31, 2026

Image: Ibrahim Rifath

Some people believe that, unless you work in the world of finance, there is no need to understand financial terms and concepts. Well, nothing could be further from the truth. Finance is a core part of society, and financial literacy is important for everyone. At the same time, some of these terms are thrown around without fully understanding their meaning. What is a principal? Is compound interest different from normal interest? What is a person’s net worth? Here are 10 financial concepts that everyone should know.

1

Principal

Image: Alexander Grey

Whether you are investing a sum of money or taking a loan, there is an initial sum of money involved. The principal is the initial amount of money that you invest or borrow. It does not include any interest, fees, or future earnings, and it’s used as a base to calculate the interest that will be added to a loan and the returns from an investment.

2

Compound Interest

Image: Towfiqu barbhuiya

We commonly understand interest as the cost we pay for borrowing money, often calculated as a percentage of the principal amount. That is ‘simple interest’, but what about ‘compound interest’? Any accumulated interest from previous periods generates its own interest as well, so compound interest is the sum of the interest on the principal amount and the accumulated interest.

3

Net Worth

Image: Andre Taissin

We often hear the media discuss the net worth of celebrities, politicians, and other public figures, but can the worth of a person be calculated? When it comes to finance, it can, and it follows a very simple formula: the value of all your assets minus any money you owe. This simple but effective calculation is a good way to check how healthy your finances are at any point in time.

4

Annual Percentage Rate (APR)

Image: Jon Cellier

Paying a loan is never as simple as adding interest to the initial amount. In most cases, there are different fees involved, which means that you might owe more than you think. The Annual Percentage Rate or APR will give you the true cost of a loan —initial amount, interest, and any additional fees— represented as a percentage. With the APR, you can also compare loans to see which one offers better options.

5

Dividend

Image: Alexander Mils

If you own shares in a company, you will receive dividends, a portion of the profit made by the company. How do dividends work? Paid regularly, often quarterly, its value is decided by the company’s board of directors, who will determine an amount to be paid per share. The more shares you have, the more dividends you will receive.

6

Amortization

Image: Towfiqu barbhuiya

When taking out a loan, we are assuming that we will pay it over a period of time. This is called amortization. While the amortization of a loan gives us the possibility of paying a large sum back in regular smaller installments, it also involves interest (both simple and compound) and fees added to the principal amount.

7

Liquidity

Image: Alexander Grey

An asset is an item of value, and this includes cash, but also other valuable things such as objects, properties, bonds, shares, etc. Liquidity refers to how quickly an asset can be turned into cash without affecting its value, which in turn tells us how quickly we could access funds to cover any payment or debt.

8

Escrow

Image: Amina Atar

If you ever looked into buying a home, you might have heard the term ‘escrow’. An escrow is a legal arrangement where a third, neutral party temporarily controls the funds of a transaction, releasing them once the contract’s terms have been fulfilled. This helps prevent fraud, reduce financial risks, guarantee fairness, and ensure that neither party takes advantage of the other.

9

Delinquency

Image: Towfiqu barbhuiya

If you are a financial delinquent, you might be in trouble, but not in the way you imagine. When taking on a loan, you assume a responsibility to pay it back. If you fail to do so, or fall behind in your payments, you become a ‘delinquent’. While delinquency is temporary, it will hurt your credit score and can eventually turn into default, which allows the lender to take action against you.

10

Liability

Image: Towfiqu barbhuiya

We often use the word liability to describe a disadvantage or something that could cause difficulties. In its financial sense, liabilities refer to a responsibility or obligation we assume, such as paying back a loan. In this sense, liabilities —money we owe— are opposite to assets —money we possess.

Facts you didn't know you needed

Is the day longer for your pet? Mind-blowing facts you need to know

Published on July 31, 2026

Image: Alexander Grey

Adults often assume they already understand the world, but there’s always something new to surprise us! Did you know that clouds actually have weight? Or that the day is longer for some animals? And that’s just the beginning. From hidden functions of your organs to the true color of the universe, today you’ll learn 10 fascinating facts you probably never thought to ask, but will make you sound impressively smart in your next conversation!

1

Slower time

Image: Bonnie Kittle

Unlike humans, animals don’t experience a shared "present" in quite the same way. Instead, their sense of time is tied to the rhythms of their own bodies. For very small animals with fast metabolisms like parrots, hamsters, or guinea pigs, time actually seems to pass more slowly. In a sense, they live in slow motion because their faster-working nervous systems allow them to process sensory information at a fast speed.

2

Identical twins, but…

Image: Juliane Liebermann

What if someone commits a crime and tries to blame their identical twin? Have you ever wondered about that? It’s a valid question; after all, identical twins not only look alike, they also share the same DNA. But here’s the surprising part: if investigators check fingerprints, the innocent twin could be cleared. That’s because, despite their nearly identical DNA, twins have unique fingerprints, shaped by subtle genetic and environmental factors in the womb.

3

Heavy clouds

Image: engin akyurt

You’ve probably spent time lying on the grass, watching clouds drift across the sky. They look light, fluffy, almost like cotton candy, and it’s hard to imagine them as heavy objects. But the truth is surprising: clouds are incredibly heavy. An average cumulus cloud can weigh around 1 million pounds! That impressive weight comes from the billions of tiny water droplets suspended in the air. So, how do they float? It’s because each droplet is extremely small and falls very slowly, while rising warm air currents help keep the cloud suspended above us.

4

Don’t believe everything you see

Image: Jack Stapleton

Most of us have a rough image of the world map in our minds. But we have something to tell you: most maps aren’t completely accurate. Because the Earth is a sphere, cartographers have to distort some areas to represent it on a flat surface. On Mercator projection maps, countries near the poles appear much larger than they really are, while countries near the equator look smaller in comparison. For example, Alaska looks about the same size as Brazil, but in reality, Brazil is nearly five times larger!

5

The Universe's color

Image: Bryan Goff

Most people don’t realize that there’s actually a name for the color of the universe. Strange, right? But it’s true! Astronomers who studied the light from thousands of galaxies discovered that if you blend all the colors from the observable universe, the result is a soft, beige-ish white shade, famously named "Cosmic Latte" in 2002.

6

No Qs

Image: Pin Adventure Map

With 50 states, there’s no shortage of variety in their names. Almost every letter of the English alphabet appears at least once, except for one: Q, which is completely absent. In addition to this, there’s another surprisingly rare letter: J. While it isn’t entirely missing like Q, it only appears in one state, New Jersey.

7

Earth’s rotation is slowing

Image: Carl Wang

Although we don’t notice it, indeed, the Earth’s rotation is gradually slowing. This happens because tidal friction, caused by the Moon’s gravitational pull on our oceans, creates a subtle drag on the planet’s spin. As a result, days are getting longer, but very gradually: by only about 1.7 milliseconds per century.

8

Dreams in sign language

Image: Ian Noble

Do you remember your last dream? Whether good or bad, dreams are a constant part of sleep, but not everyone experiences them in the same way. Deaf people who use sign language in their daily lives often communicate through signs in their dreams, too. Meanwhile, blind people tend to have dreams rich in sounds, smells, and tactile sensations, using these other senses to experience the dream world.

9

Walking underwater

Image: Wade Lambert

We’re used to seeing hippos covered in mud, splashing in water, or barely peeking above the surface. But here’s a surprise: hippos can’t actually swim! That’s right. Because of their huge, heavy bodies, they don’t float or paddle like most animals. Instead, they walk or run along the riverbed.

10

Is your brain hungry?

Image: BUDDHI Kumar SHRESTHA

Can your brain really "eat" itself? Well, close, but not exactly. There’s a process called phagocytosis, carried out by specialized immune cells in the brain known as microglia. These cells engulf and remove debris, dead cells, and other unwanted material. But don’t worry; it’s safe! The mechanisms exist to protect, repair, and maintain your brain.

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Learn more with our Word of the day

befuddle

/bəˈfəd(ə)l/