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

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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

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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

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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

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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

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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

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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.

Odd words, old meanings

These 10 idioms and phrases are still in use, but don’t always make sense

Published on July 31, 2026

Image: Towfiqu barbhuiya

How much is a notch when it comes to volume? Who is Bob, and why is he everyone’s uncle? What is the difference between a spider web and a cobweb? Languages change with time and use, and English is no exception, but some phrases remain frozen in time, and while we still use them, we don’t always know their literal meaning. Here are 10 idioms and words that don’t make sense, but once did.

1

To a T

Image: Tobias Schwindling

We often use the phrase "to a T" (sometimes spelled "to a tee") to indicate something done perfectly, with precision. But is it about the letter "T"? Not really. The original phrase used to be "to a tittle," with tittle being the proper name for the dot of the "i" or the "j," and it conveyed the idea of doing something accurately, down to the smallest detail. Eventually, "tittle" was shortened to "T," but the phrase had already stuck, even if its literal meaning was lost.

2

Fathom

Image: Uliana Semenova

Although "fathom" might sound very formal, we all know that it is synonymous with "understand." But did you know that fathom is actually a nautical unit of measurement? From the Old English fæðm ("the span of the arms" or "embrace"), it represented the distance between the left and right fingertips of outstretched arms. Eventually, a "fathom" was standardized to about six feet or two yards, and was mainly used by sailors to measure water depth. It was this connection with depth that led the word to take on a figurative meaning of "getting to the bottom" of something, or understanding it thoroughly.

3

Red herring

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Popularly, we understand that a "red herring" is something meant to give false clues or distract from another pressing issue. But why a herring? Herrings turn red when smoked and also acquire a strong, pungent smell, which made them a great tool for training hunting dogs, as the smell of the fish covered the trail of the prey. As a metaphor, though, it was popularized in the early 19th century by journalist William Cobbett, who used it to describe how the press was easily swayed by false news.

4

Rule of thumb

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If something is a "rule of thumb," it means that it’s a common guideline, usually based on experience rather than science. In its origins, this phrase was quite literal: thumbs served as a rule. Tradesmen often used the width and length of their thumbs to take and remember measurements, a system that, though practical and effective, only worked for the owner of the thumb in question. Its use as an idiom comes from 17th century writers comparing this popular method with more scientific measuring systems.

5

Turn it down a notch

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If someone asks us to "take it down a notch," how much should we lower our volume? With "notch," this idiom refers to mechanical dials, like the ones used in a radio, where the notches signal the different levels. And while radios only date back to the 20th century, the roots of this idiom go all the way back to the 17th century and to the phrase "take it down a peg," related to wooden pins used for measurements.

6

Cobweb

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Is there a difference between a cobweb and a spiderweb? Although they are synonymous, most dictionaries will make the distinction that "cobweb" is particularly used for dusty, abandoned spiderwebs. But what does the "cob" part mean? "Cobweb" is derived from the Middle English coppeweb, composed of coppe ("spider") and web ("woven fabric"). If we go one step further, coppe comes from the Old English attorcoppe ("spider"), a mix of attor ("poison") and coppe ("head" or "round thing"). So, despite the slight difference in their actual use, "cobweb" and "spiderweb" mean the same thing.

7

Break the ice

Image: NOAA

It isn’t difficult to see how "breaking the ice" might have originated from people actually breaking ice, but what many ignore is that this custom (and the phrase) is rooted in diplomacy and trade. When large trade vessels were unable to advance due to frozen rivers, canals, or harbors, it was common to send people in a small boat to "break the ice" and allow the ship to continue its course. In some places, however, locals would send "icebreakers" to clear the path for a foreign vessel as a welcome and a sign of goodwill. The metaphorical use of the phrase exists in many languages, but it was first recorded in English in the 16th century.

8

Let one’s hair down

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The idea of "letting down your hair" is popularly associated with relaxing and letting formalities aside, but the phrase is rooted in an actual Medieval and Renaissance custom. Traditionally, single women would keep their hair loose and uncovered, but would pin it up once they married. It was not proper for a married woman to be seen in public with their hair down, something they would only do in the comfort of their home, foregoing elaborate hairstyles and uncomfortable pins. Eventually, loose hair lost its social status meaning, but the connection with relaxation remained.

9

Bob's your uncle

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According to historians, no one knows who Uncle Bob is, or what his connection is with simple and easily accomplished tasks, but popular folklore claims to have the answer. According to this theory, the phrase refers to British Prime Minister Robert Gascoyne-Cecil (who went by Bob), appointing his nephew Arthur Balfour as Chief Secretary for Ireland, a position he was woefully unqualified for, but that was made possible because "Bob’s your uncle".

10

Midwife

Image: Juice Flair

Have you ever wondered why midwives have that name? After all, there is nothing "mid" nor necessarily "wifely" in helping someone give birth. The answer takes us back to Old English, where mid meant "with" or "together with," and wif (the origin of "wife") meant "woman," "female," or "lady," and not necessarily a married female. First recorded around the year 1300, "midwife" was an accompanying person (typically a woman) who assisted mothers during labor. Although the literal meaning of the term is lost to us, the importance of the role was surely the reason this word survived through the centuries.

Looking for an extra scoop of literary fun?

Learn more with our Word of the day

doleful

/ˈdoʊlf(ə)l/