Fiscal terms every millennial should know about

Adulting is hard enough without having to think of savings, profits, investments, learning about fiscal terms is like a rite of passage. 

We should have been taught money management in school. Adulting is hard enough without having to think what, how and why of fiscal management. All adults learnt to calculate taxes after starting to earn and honestly, very few know the right way to do it. While money management will be learnt in time, there are a few fiscal things all independent adults should know about to tackle the crushing weight of money related problems.

Here are the fiscal terms every millennial should know about.

  1. Credit Score – Credit score is a numerical representation of a person’s credit worthiness. If the credit score is higher, borrowers are more inclined to trust them while lending out a loan. Credit score usually shows your worthiness of getting money credits. It considers your payment history and keeping a credit score makes for a healthy relationship between you and money. A higher credit score can be achieved by timely payment of loans, avoiding taking big debts at one time etc.
  2. Compounding – Compounding is the process where the money is credited to the principal amount as well as the interest generated. It is a means to grow wealth while keeping the exact amount without withdrawing. The interest generated also generates more interest making the growth of wealth.
  3. Capital Gains – Capital gains is the value increase of an asset that you own. Suppose you have invested in real estate and the capital profit you make while selling it is the capital gains. For a steady capital gain, it is imperative to sell when the market value is higher than the money you paid for the asset.
  4. Asset allocation – Asset allocation is choosing where to invest in. Asset allocation keeps your finance stable by taking into account your money as well as the market conditions, the risks and returns of your investment. It is beneficial by encouraging long-term investments and playing for the long run when it comes to financial stability.
  5. Stock Options – It is crucial to know all the options you have in the stock market. Stock options are generally provided as management incentives by companies. Employees can buy the stock of the employers at a fixed price and make a profit out of it. Stock options are popular as employees benefit, no matter their tier in the company.

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