Money talks

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

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

Deep roots

11 everyday words with indigenous roots

English is a very welcoming language in the sense that it incorporates terms from many other languages from all over the world. And, as it couldn’t be otherwise, Native American languages have lent many of their words and terms to English speakers. Some traveled through Spanish or French before settling into English, and others arrived directly through early contact and trade, helping shape the way we speak today. Did you know about these 11 terms?

The word "canoe" comes from the Taino term canoa, which was first used by Caribbean islanders long before Europeans arrived. Early explorers adopted it to describe the slim, sturdy boats they saw.

Over time, "canoe" became the standard English word for a small paddled craft. Today it still carries that sense of simplicity and closeness to nature.

The word "barbecue" comes from barbacoa, another Taino term for a wooden frame used for cooking meat over fire. Europeans adopted it and applied it to both the method and the gathering itself.

Today, "barbecue" means everything from a backyard cookout to a regional cooking style. Its origins highlight the deep culinary influence of Native Americans in the nation's current culture.

"Skunk" comes from the Algonquian word squnk, which means "urinating fox" (quite a fitting term, indeed). This was an obvious reference to the animal’s strong defensive spray. Early settlers adopted the term directly.

Since English had no better name for the creature, the Native word stuck. Today, the word skunks is also used as playful slang.

The word "moose" originates from Eastern Abenaki, a part of the Algonquian family, where it meant "he strips off bark." Yes, it described the animal’s habit of tearing bark from trees.

The name entered English quickly because settlers relied on Native knowledge of local fauna. The word remains unchanged because of its accuracy and usefulness.

"Raccoon" comes from the Powhatan word arakun, meaning "he scratches with his hands." It described the animal’s clever, humanlike front paws.

Settlers adopted the term because it captured the creature’s behavior beautifully. Today, the raccoon is used as a household symbol of curiosity, not unlike the animal itself.

The term "chipmunk" most probably comes from the Ojibwe word ajidamoo, which means "one who descends trees headfirst." Early English settlers adapted the sound into today’s form.

Though the spelling changed over time, the lively image of a chipmunk racing down a tree face-first stayed.

The word "caribou" comes from the Mi’kmaq term qalipu, which means "snow shoveler," referring to the animal’s habit of digging through snow for food.

French settlers brought the word into English, keeping its descriptive nature. The name still connects the modern animal to the winter landscapes it belongs to.

"Totem" comes from the Ojibwe word ototeman, which means "kinship group." It described symbols representing clans and shared roots.

English adopted it to describe carved poles and symbolic elements. Though broader in modern usage, it still hints at the original sense of community, identity, and heritage.

"Coyote" comes from the Nahuatl word coyōtl, which was used by Indigenous tribes of central Mexico. Spanish speakers adopted it, and English borrowed later.

The word kept its meaning, and it remains one of the most direct links between the English language and Nahuatl.

The tasty avocado’s name traces to the Nahuatl word ahacatl, which refers to the fruit and to a body part as well. Spanish speakers transformed it into aguacate.

Later on, English speakers adapted it to avocado. While the name sounds contemporary and culinary, it has ancient Native roots.

The last Nahuatl word and also the last word on the list comes from the term xocolātl, which describes a bitter cacao drink that was consumed long before Europeans arrived in America. The name traveled from Spanish to English.

Though the product changed dramatically, the word survived. Today, chocolate is a universal symbol of sweetness, with rich and deeply indigenous roots.