Accountant: A professional, who is usually but not always a CPA, who helps you maintain your financial records and prepares and submits your tax returns.

Annual Percentage Rates (or APR): Fees charged by credit card companies when you do not pay your bill in full.

Appreciation: The increase in value something has over time.

Asset: Anything you own that has commercial value.

Asset allocation: A reference to how you keep (or allocate) your money. It is a good idea to keep your extra money in a variety of places: Cash, stocks, bonds, houses, cars, etc.

Attorney: A practicing lawyer who provides overall legal advice and also sets up trusts, wills, and powers of attorney.

Bond: A loan to a company or to a government. When you buy a bond, you agree to loan your money to the company or government in exchange for interest payments they make to you and the return of your money at a later set date.

Budget: An itemized plan of what you earn and what you spend.

Balancing (reconciling) your checkbook: At the end of every month, you and the bank need to agree on the number of checks you wrote, their total dollar amount, the money you withdrew in addition to them from your ATM, and the deposits you made.

Bank statement: Each month your bank will send you a piece of paper that shows your ending balance from the last month, a list of all the checks you wrote, the deposits you made, and an ending balance for the current month.

Broker: A professional who can help you buy stocks, bonds, and mutual funds.

Brokerage account: An account held at a financial institution, like a bank, within which you can purchase and keep stocks, bonds, mutual funds, and other types of financial investments through a professional (called a broker).

Capital gain: The difference between what you paid for a stock or bond and what you sell it for. If the price for which you sold it is higher, you made money, and you pay a tax on that amount.

Checkbook register: The place in the front of your checkbook where you should write down all of the checks you have written and all of the deposits you have made.

Checking account: Provided by financial institutions so you have a place to deposit and withdraw your money.

Claim: The amount you ask your insurance company for after something you’re insured against happens.

Compound interest: In which you are paid interest on your interest.

Compounding period: How frequently interest is charged, since it can be charged in yearly, monthly, weekly, and daily increments.

Corporate taxes: Taxes companies pay on their profits.

Credit card: A small but powerful piece of plastic. It allows you to buy something now, today, when you want it, and pay for it later.

Credit score: A number assigned to you that is, in effect, a snapshot of your credit risk at a particular point in time. Credit scores range from 350, which means you’re a poor risk, to 850, which means you’re a good risk.

Credit agency: A company that collects relevant information about you on behalf of lenders.

Commission or commission rate: Fees charged by brokers for their services.

Credit limit: The total amount the credit card company decides you can borrow on its credit card.

Debt: An amount of money that you owe.

Debit card: An extension of your checking or savings account. Each time you make a purchase, the money to pay for it is taken directly from either your checking account or your savings account, depending on which account you tell the bank to debit.

Deductible: The portion of the claim that you pay for, for which the insurance company is not responsible.

Depreciation: The loss in value any given possession has over time.

Discount brokers: A broker who gives you a discount on their commission for making stock or bond market trades for you in exchange for not giving you advice.

Diversification: Spreading your money among different types of investments.

Excise taxes, also called “sin taxes”: Taxes levied on items like liquor, cigarettes and cigars, and gambling.

Expenses: All the money you spend, both practical and impractical.

Fashionista: An enthusiast of fashion.

Federal Deposit Insurance Corporation (or FDIC): Insurance provided by the government to protect you from losses of up to 250,000 dollars if your bank goes bankrupt.

Federal income tax: Pays for country-wide services like defense and education.

Financial Goddess: You.

Financial planner: A licensed professional who can help you manage your overall finances, not just your portfolio.

Fixed interest rate: In which the bank pays you (or you pay the bank) the same amount of interest each time a payment is made, based on a pre-agreed amount.

401K: A retirement plan offered by your employer. A 401K takes money out of your paycheck (you decide how much) and deposits it into a retirement savings account for you.

Fund manager: A licensed professional who manages mutual funds.

Identity Theft: When someone uses your personal information (like your name, Social Security number or credit card) without your permission to purchase things illegally in your name.

Income: Money you earn (bring in).

Income tax form: The form you file with the federal government, in which you report your income and the taxes you have already paid throughout the year.

Index fund: A type of mutual fund that is passively managed, meaning the fund seeks to mirror the market and there is no fund manager.

Individual Retirement Account (or IRA): A personal retirement account, different from a 401K, which is a company retirement account.

Insurance: When you make regular ongoing payments to an insurance company in order to protect yourself financially if something goes wrong.

Insurance agents: Professionals who help you determine what kind of insurance you need, how much of it you need, and which policies and carriers will work best for you.

Interest: Fees banks pay for the privilege of using your money or that you pay banks for the privilege of using their money (usually expressed as a percent).

Interest rate: The amount of those fees.

Investment advisor: A professional in giving investment advice who must be registered with the Securities Exchange Commission or state securities agencies.

Impulse spending: Spending without forethought—or much of any thought.

Liability: An obligation, something you owe. In insurance, a legal term for what your responsibility is to the other people involved.

Local income tax: Pays for town and city projects.

Matching contribution: An employer’s contributions to your 401K account (usually a percentage of your paycheck up to a designated amount).

Medicare: Used by the federal government to aid people over sixty-five in paying for their medical care.

Mutual fund: Allows investors who have the same financial goals and objectives to pool their money together. As with a stock, you own a share, but of the fund, not of the individual company. Unlike a stock, a mutual fund can contain both stocks and bonds.

Net worth: The total of all of your assets minus the total of all of your liabilities.

Opportunity cost: What you will be giving up as a result of a decision you make.

Outstanding deposits: Any deposits you’ve made or fees you’ve earned that are not yet credited to your bank account.

Outstanding withdrawals: Any checks you’ve written or fees you’ve been charged that have not yet been subtracted from your bank account.

Overdraft protection: A bank will cover you for a short time if a check you’ve written does not immediately have the funds to pay for it in your bank account.

Passbook savings account: A basic savings account.

Policy: What you buy when you buy insurance, namely an insurance policy.

Premium: The amount you pay for an insurance policy.

Prepaid card: A debit card that has a specific amount of money paid into it by someone else, instead of being linked to a bank account.

Principal: The original amount of money you borrowed from a financial institution or charged on a credit card.

Proof of loss: What an insurance company requires you to provide in order to verify the claim you are making to it. Insurance companies won’t just take your word that you need money.

Property taxes: Taxes on real estate (houses and land sometimes cars).

Realtor: A licensed professional who helps you find and navigate the home-buying process.

Return on investment: A measurement of how much your money has increased or decreased (gained or lost) relative to what you invested over a one-year time period.

Risk: The degree of probability that something will cause you to need your insurance company for financial assistance. Risk is also the amount of chance you are willing to take with your money when you purchase financial investments.

Roth IRAs: A type of personal retirement fund in which you pay taxes before funding it, thereby allowing the money you put into it to grow tax free.

Sales tax: Federal or state tax on stuff you buy.

Savings account: Provided by financial institutions to provide you with a safe place to save your money and earn interest. There are three kinds of such accounts: Basic, money market, and certificate of deposit (CD).

Schedule C: The section on an income tax form where you include income that did not come from a full-time employer.

Simple interest: When you borrow money, you pay back the amount you borrowed (principal) plus interest on it. The formula for calculating simple interest is: Interest equals Principal multiplied by Interest Rate multiplied by Time held.

Social Security: Funded by the deductions from your paycheck and used by the federal government to give financial assistance to people who are retired or disabled; the full name for Social Security is the Federal Insurance Contributions Act (FICA).

Stock (share of stock): Ownership in an individual company; how much ownership depends upon how much stock you buy.

Stock market: Where stocks, bonds, mutual and index funds are traded.

Taxes: Fees paid by everyone to help support federal, state, and local governments and their projects.

Time value of money: All things being equal, it is better to have money sooner rather than later.

Variable interest rate: The differing percentages of interest the bank pays you (or you pay the bank) based on how interest rates are performing at any given time; interest rates rise and fall depending on a variety of factors.

W-2: A tax form from your employer reporting your earnings and the amount of income tax they withdrew from your paycheck during the year.

W-4: A tax form requiring you to give your employer your permission to deduct taxes from your paycheck

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So it costs a company more to borrow from a bank than it costs them to borrow from you. Plus, when a company borrows money from a bank, the bank often tells them what they can and can’t do with their money. The banks give the company lots of rules, which are called covenants. For example, a bank might tell a company that the money can only be spent on one thing, like operations and not on expansion. Or the bank might say that if the present head of the company leaves the company, all of the money is due back to the bank immediately. Or the bank might tell a company how much cash it must keep on hand at all times. Sometimes the bank requires the company pay back the loan too quickly for the purposes the company is raising money for, like building a new plant.

Companies can find these rules stifling. So, instead of going to a bank for a loan, a company will issue a bond through the bond market. (Think of a bond market as a huge shoe store—where you can buy all different kinds of shoes. In the bond market, you can buy all different kinds of bonds.)

Company bonds are typically issued in 1,000 or 5,000 dollar increments. These increments are called the face value. Face Value really refers to your principal—the amount of money you paid for the bond. The face value has to be paid back to you within a set time frame, called a maturity. The time period in which the face value must be paid can vary from as little as 30 days to as long as 30 years and anywhere in between—there are bonds with even longer maturity dates than 30 years, but they are rare. But typically a bond’s maturity is seven to ten to fifteen years in the future.

Generally in exchange for borrowing your money and issuing you a bond (which is the piece of paper or contract that describes the terms of the loan), a company will periodically pay you interest. Interest is the fee the company pays you for borrowing your money and is no different from the interest the bank pays you. When interest is paid from a bond rather than from a bank, it is called a coupon. To reiterate, a coupon payment is conceptually no different from the interest the bank pays you for leaving your money in a savings account. And, just like with a treasury, the longer the company borrows your money, the higher the interest rate because the longer you are agreeing to tie up your money.

So, when a bond is issued, the bond issuer (the company borrowing the money) determines how much money they need to borrow, the total value of each individual bond (principal), how long they need to borrow the money for (maturity), and the fee they are willing to pay to borrow the money (interest rate or coupon).

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When you buy a corporate bond, you agree to loan your money to a particular company, rather than the US government, in exchange for interest payments that the company will make to you. You can buy corporate bonds from a lot of different companies (lots of different types of companies sell bonds), for example Microsoft or AT&T. Buying a corporate bond is considered riskier (less safe) than buying a treasury or savings bond. Why? Because treasuries and savings bonds are backed by the US government while a corporate bond is backed only by the particular company from whom the bond is purchased. And, unlike to government, a company can’t print more money or raise taxes to pay its debts.

Just like with treasuries, the company that issues the bonds you buy will return your money (your initial investment) plus the interest you’ve earned (the company selling the bond sets the interest rate at the time they issue their bond) once the bond has run its course at a later set date (maturity).

Usually you receive your interest rate payments in the form of checks, sent out within a set time frame, often semi-annually. Then, when the loan matures, you receive the full amount of your original loan back. The original amount you loan the company is called the “Principal”.

Company bonds usually refer to loans that are longer than one year, but like the US government, corporations can also issue shorter term loans. These shorter term company loans are called “Commercial Paper”.

More corporate bonds tomorrow.

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You know…the money that seems to leave your wallet without your knowing it… and which you can never figure out where it went…

It even tells you what’s left – how much money you have in your account. What, no iPhone? You can still use their simplified version at m.quicken.com.

http://blog.quicken.intuit.com/2009/04/30/introducing-our-first-iphone-app-quicken-online-mobile/

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Links to their reviews are below  (please provide them with a lot of traffic):

http://selfhelpbooks.suite101.com/article.cfm/so_many_shoes_so_little_money_by_lisa_serwin

http://textbooks-finance.markettradeathome.com/2009/06/27/so-many-shoes-so-little-money-a-girls-guide-to-finance/

http://www.everythingfinanceblog.com/2009/07/so-many-shoes-so-little-money-girls.html

Thanks! For additional information you can also check out my website somanyshoes.net

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Women sometimes shy away from money management. By mixing fashion and finance, I try to use a fun, familiar topic to help learn about an unfamiliar topic.  There is no reason you can’t enjoy gaining these essential skills, despite any misgivings.

Did you know:

Women also have debt. Current estimates suggest that almost 40 percent of young adults (women and men) have more than 10 thousand dollars in student loans and more than 20 percent have credit card balances of at least five thousand dollars. The same study indicated that more than half of all adults in their early to mid-20s have little knowledge about financial matters. Women are out there making large purchases and spending money, often without guidance, and they need to start out their adult life with the information they need to adequately manage their money.

First of all marrying rich is never a given and rarely the solution. Second, there is no guarantee the relationship will work out. A lot of marriages end in divorce; it is a myth that you will always wind up with half of the assets. Third, having your own career means you are at no ones mercy. You answer only to yourself and are not dependent on anyone – a very empowering notion.

To paraphrase Maureen Dowd, if you give up your career to focus on your husbands/significant other/or at the request of a “special friend”, it is not his/her/their fault if things don’t work out and it turns out you sacrificed more for the relationship than they did. “Like an investor in a down market, you took a risk without a guarantee that it would pay off. If you make your significant other your career and you lose them, you lose your career too.”

http://www.nytimes.com/2009/07/01/opinion/01dowd.html?_r=1

Raising your joint children is no guarantee either. Mrs. Edwards, Mrs. Ensign and Mrs. Sanford all have children. Religion is not a savior – Governor Sanford considers himself a very religious man. Jobs can be lost – unemployment is currently 9.5%, and, in a worse case scenario your significant other could die.

The best thing you can do to take care of yourself (and your children) is to make and learn to manage your money.

Note on divorce rates:

Married adults now divorce two-and-a-half times as often as adults did 20 years ago and four times as often as they did 50 years ago… between 40% and 60% of new marriages will eventually end in divorce. The probability within… the first five years is 20%, and the probability of its ending within the first 10 years is 33%…

—Brian K. Williams, Stacy C. Sawyer, Carl M. Wahlstrom, Marriages, Families & Intimate Relationships, 2005 as quoted on Wikipedia

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I use the language of fashion and shopping to convey money management fundamentals: The basic questions of how to budget, when to use credit cards, how to know which fashions to buy, what to do when you’re in debt and more ― it’s all covered. Each chapter draws parallels with fashion while delivering the primary message: If you want to be stylish, you must take care of your money―and the sooner the better. Managing your money truly is the new black.

Click here to purchase.

Thank you!

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Can you embroider “My 401K lost 30%” on this pillow? Are you sure I can’t pay more? Does my bank account make me look fat? Do you think my credit card company has my back? Is my CPA single? Taxes anyone? Do you think his checking account is what killed him? How great is my bank card photo? Can you make my paycheck smaller?

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Annual Percentage Rates (APR)
Fees charged by credit card companies when you do not pay your bill in full.
The credit card company charged me major bucks last month when I didn’t pay my bill in full – damm you Jimmy Choo!

Budget
An itemized plan of what you earn, what you spend, and what you can spend.
The new Gucci bag I am coveting is not in my budget – I might have to rent it!

Debt
Spending more than you can afford on anything (un-stylish)
Girl #1 – “Fantastic new jeans – tres chic! Were they expensive?”
Girl #2 -“Very. They put me in debt but I had to have them.”
Girl#1 – “That is so not stylish.”

Compound Interest
Where you pay (or receive) interest on your interest.
I owe so much interest on my credit card bill it’s as if my shoes bought their own shoes.

Time Value of Money
All things being equal it is better to receive money sooner than later.
A true Fashionista measures time in seasons and hates to wait.

Professional Help
Experts who can help you manage your money: Accountants, Attorney, Financial Planner, Investment Adviser, Insurance Broker, Realtor, Stock Broker
I’ve hired a professional, after all it’s a fine line between super stylish and fashion train wreck.

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