What Is Personal Finance?

Personal finance refers to how you manage your money, including your income, expenses and savings. When you put an effort into managing your personal finances, you have a better grasp on where your money is going and what changes you can make to meet your future financial goals.

What Is Overdraft Protection?

Overdraft protection is a service offered by banks that issues you a short-term loan when you make a purchase with your debit card or write a check for more than your balance. However, the service comes at a cost, and it can sometimes be far more expensive than having the purchase denied.

What Is Net Worth?

Your net worth refers to how much more your assets are worth than your liabilities. In short, your net worth is how much money you would have if you sold everything you own and used the proceeds to pay off your debts, explains personal finance blogger Trent Hamm in the Christian Science Monitor. If the money wouldn't be sufficient to pay off all your debts, you have a negative net worth.

What Is Net Income?

Net income refers to the cash value of a paycheck after deductions. Gross income -- your pay before deductions -- starts with your wages for the pay period. For salaried workers, this equals your annual base salary divided by the number of pay periods in the year. Hourly workers' gross income equals their hourly wage multiplied by hours worked, plus any overtime pay. Additional income from nonemployment sources may adjust the gross amount. Deductions can be pretax, tax or after-tax. Net income is your actual take-home pay after all adjustments.

What Is an ESOP?

An employee stock ownership plan is one of several ways for employees to receive stock shares from their employers. Other methods include stock options, bonuses, direct purchase and profit-sharing plans. As of 2014, about 7,000 U.S. companies sponsored ESOPs, covering 13.5 million employees, making it the nation's most common type of employee ownership. ESOP's have a number of benefits worth noting.

What Is an Employee Stock Purchase Program (ESPP)?

An employee stock purchase plan is a program that permits employees to use some of their paycheck to buy stock in the company for which they work at a discount. Such plans often are presented as an extra benefit and are used for employee recruitment and retention purposes.

What Is a 401k?

A 401(k) is a retirement savings account offered by for-profit employers to help their employees save for retirement. A 401(k) offers tax breaks for diligently saving for retirement, according to the Internal Revenue Service, but isn't the easiest account to withdraw from if you need money before you retire. Using a 401(k) for your retirement savings increases the growth of your nest egg because no matter what type of 401(k) you use, the money grows without being taxed.

What Are Payments?

Payments refer to the transfer of money or services by someone to fulfill his obligations to another party. In the personal finance area, payments refer to money given to creditors by the borrower to pay back loans such as credit cards, mortgages and student loans.

What Are Minimum Payments?

Minimum payments refer to the smallest amount you can pay on a debt and still be considered current with your payments. The term minimum payment is usually used in the context of credit cards. Even though you might think you're doing just fine paying the minimum, if that's all you pay, it can take you several years (and potentially thousands of dollars in interest) to pay off a debt.

What Are Loans?

Loans refer to when one party gives money to another on the condition that it be paid back, typically with interest, at a certain time in the future. The terms of the loan determine what that interest rate will be, how long the borrower has to repay the money, and sometimes place additional stipulations on the funds including how the proceeds are used.

Pages