Glossary
AI Finance Glossary
Plain-English definitions of AI, accounting, and SaaS-finance terms.
Categories
A
B
C
Cash Basis Accounting
An accounting method that records income and expenses only when cash is actually received or paid.
Coinsurance
Percentage of costs the insured shares with the insurer after the deductible is met.
Compound Interest
Interest calculated on both the initial principal and previously accumulated interest, enabling exponential growth of savings and investments over time.
Copayment
Fixed amount the insured pays for a covered health care service at the time of service.
Credit Score
A numerical rating (300–850) representing an individual's creditworthiness based on their credit history and behavior.
D
Debt-to-Income Ratio
A personal finance metric comparing monthly debt payments to gross monthly income, used by lenders to assess borrowing capacity.
Deductible
Amount the insured must pay out-of-pocket per claim before insurance coverage begins.
Dividend Reinvestment
The automatic use of dividend payments to purchase additional shares of the same investment, compounding returns through increased ownership.
Dollar-Cost Averaging
An investment strategy of investing a fixed dollar amount at regular intervals regardless of price, reducing the impact of market volatility over time.
E
ETF
An Exchange-Traded Fund — a basket of securities that trades on a stock exchange like an individual stock, combining diversification with intraday liquidity.
Emergency Fund
A dedicated savings reserve covering 3–6 months of living expenses to protect against unexpected financial disruptions.
Estate Planning
The process of arranging for the management and distribution of assets during life and after death, minimizing taxes and ensuring wishes are carried out.
F
FICO Score
The credit scoring model developed by Fair Isaac Corporation, the most widely used by lenders to evaluate consumer creditworthiness.
Flexible Spending Account
An employer-sponsored account allowing pre-tax contributions for qualified medical or dependent care expenses, with annual use-it-or-lose-it requirements.
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P
Portfolio Rebalancing
The process of realigning a portfolio's asset allocation back to target weights by selling overweight assets and buying underweight assets.
Power of Attorney
A legal document authorizing a designated person to manage financial, legal, or healthcare decisions on behalf of the principal.