Learn essential finance terms & vocabulary – Free English lessons online

Well the US dollars have gone up and the Euros
have crashed again. What a waste, right? Hello welcome my name is Emmelda and today’s lesson
is for all those, who feel struggled or who actually have to struggle to understand or
to teach someone some basic financial terms. If you are one such person relax my child,
your prayers have been answered. Because today we will be learning basic financial vocabulary
and of course I would have some people, who would say, these words, what a big deal. I
know these words. Well, you may want to stick around as I will be showing or teaching, how
some of these words are used as idioms in day to day life, which are not related to
finance, so stay tuned and let’s begin.

First word I have for you is Currency. What
is a Currency? Currency is a form of money used in various countries. Now there are six
different currencies which are recognized throughout the world. When I say recognized,
I mean that if by any chance, you get hold of that particular currency, you may wanna
go to a bank and they will exchange it for you, because they will respect that currency
and give you a local form of money. So what are the six forms of currency, which are valued
or respected throughout the world or recognized throughout the world, here they are. The first
one is US Dollars popularly known as USD. Then we have the British Pound and the symbol
looks very similar to L. We have Euros from Eurozoe. We have Japanese Yen.

We have Australian
Dollars and Canadian Dollars. Now these are the six forms of currency used recognized
throughout the world. Trust me and i know, you may not believe me, but Chinese Renminbi
is coming up fast and actually gaining popularity. So maybe in couple of years Chinese Renminbi
maybe, would be considered as another form of recognized currency throughout the world.
So now when we have currency, obviously I’m talking about money that you can use to buy
or sell an item. So what do you call that particular amount of money, when you buy or
sell your item? You call it price.

Again price has two different forms. The price that you
pay to buy an item, that’s called cost price and the price you give an item for, that’s
called the selling price. However people use different word, people use a different form
of word for price. You may come up with a question or you may hear this question. How
much is this item worth for? Or this particular artefact is worth a million dollar, so price
sometimes is used or is replaced with the word worth. Now if you want to use price in
a non financial term, you will hear statements like, i paid a heavy price for being his or
her partner or the freedom fighters of third world countries paid a heavy price to gain
independence, by giving up their life. So here price is used as an idiom, because they
are talking about their sacrifice they have to make to get something. Now when you do,
when you have cost price, selling price that means, you’re using money to buy and sell
an item. But what’s the activity called? The activity is called sale, now sale has
various meaning.

I’m sure you would see this word sale in many shopping areas. And
it would say 50% sale, 100% sale or 80% sale. Well quite hundred percent sale is quite optimistic,
yeah i know. Fifty percent or Eighty percent, but that’s a different meaning. I’m talking
about the basic definition of sale, where it talks about the activity through which
you do a transaction or that means you buy or sell a product. Now if you remember a couple
of seconds ago, i said transaction. What is a transaction? If sale is an activity, transaction
is a process. It’s a process through which this buying and selling of services or products
are take place.

So transaction is a process, whereas sale is an activity. Of course what
happens in a process? You gain or lose something. You do something. So what do you get? When
you do a sale, when you buy and sell an item. You may end up having a profit. That means
if i buy an item let’s say for ten dollars, but i sell it for twelve dollars. I made a
profit. Agreed right? Different word for profit is gain.

I can say, i made a gain of twelve
dollars or two dollars. But if i buy an item for ten and sell it for eight. I made a loss
of two dollars. So any time, if you’re selling price is above your cost price. You make a
profit. If you’re selling price is lower than your cost price. You make a loss. But
there are times when, you buy an item for ten dollars and you sell an item for ten dollars.
What’s that point called? It’s a breakeven point. That means you’re not making a profit,
you’re not making a loss.. It’s very common term for business people. Why? Because there
is a minimum point or there’s this cost price that they will have set that, you know
dude beyond this, if i sell it any lesser. I’m gonna make a loss. So let’s say, i
buy an item for, i buy a book for a thousand dollars. I read it and then i say, Oh you
know what i need to make some corrections, i need to do this, i need to do that.

I beautify
the book, i laminate the book. Good job, probably in thousand rupees i added, in thousand dollars
i added another two hundred dollars making the book look nice. Now i actually invested
thousand two hundred dollars. So any time if a person comes and tells me, Hey dude can
you give me that book for like thousand dollars, no. I can’t because i need a minimum of
thousand two hundred dollars to at least not have a loss, so that point is called a breakeven
point. So that’s a very simple term. But It’s very very effective, because you need
to decide what’s your breakeven point or what’s your breakeven price, when you’re
transacting with your wife. No kidding, relax. That we’ll talk about later. So moving on
to the next word i have is Discount. Remember i talked about sale and i needed told you
that, oh sale i know, shopping, shopping, i know yes. Why? Because discount means a
lower price that means maybe a book or a lovely dress costs me around eighty dollars.

But
it’s on discount and now it’s costing me only sixty dollars. That means it has gone
lower than the offered price. Again discount has various words. They say it as offer price
or they say as a sale price. Now how do you use discount in a day to day life? Or not
related to finance. You will hear or if you want to say to someone that, hey don’t discount
me or hey don’t discount my effort. It actually means don’t underestimate me. So that actually
the word discount means. You’re underestimating the value of a product. But some people use
it as, hey dude you know what don’t discount me. I can do better than that. Hey dude you
know what don’t discount my effort, i actually put in a lot of effort to give you what i
have. So sometimes people use discount not related to finance and that means you are
underestimating someone. Moving on to the next word i have is Gross. Yes it’s gross
and not gross. It’s gross. A lot of people confuse this to gross, no. It’s gross, like
ewww it’s gross.

Its gross, gross means in totality or total. And you will hear the
term or read the term GDP. What’s GDP? GDP is Gross Domestic Product means total products
and services produced in a particular period of time in a particular place. So that’s
gross domestic product or GDP. What’s gross, it does not have any deduction. It has all
the taxes, all the charges it is involved with and it means in total. Sometimes you
will hear people saying, my gross profit was ten thousand dollars. When they say gross
profit and if you go to a shop, they say the gross price is ten thousand dollars or your
gross salary is let’s say five thousand dollars for a month. It means that they are
talking about the salary in total and they are not talking about taxes. So that’s a
killer by the way. So that is your gross, but if it’s your gross and I’m not talking
about your taxes or your deductions and if i deduct all those things, what you will have
is Net.

So my dear salaried people or if you’re going for an interview, you may wanna ask
this question. Thank you for this opportunity. What is my gross salary? They will say perhaps,
well if you’re lucky they may say you’re gross salary is ten thousand dollars. Ooh
nice, i love it. But hold on for a second. You need to ask what is my net salary? Why?
Because your net salary will minus away all your taxes and fees and any other, sorry any
other deduction. And guess what for all you know, your net salary is just two thousand
dollars. Ouch, that hurt, yes that hurt . So if you’re talking about salary, if you’re
talking about profit, if you’re talking about any business transaction. These two
words are very very important because these two words can be a deal breaker. So i hope
you learnt these beautiful vocabulary, these beautiful words and next time perhaps when
you open up a financial newspaper or a magazine.

You are little more clear of what these words
actually mean. Now I’m sure these words are not those great words used in financial
or you know finance MBA. But these are the basic words you may wanna start with, I hope
this lesson was very useful to you. I will be back soon with another new lesson. Until
then have fun learning English. Stay healthy and be beautiful. Good Bye..

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