Finance Vocabulary: How well do you know your Onions?

Hey there! We’re back!!! And we hope you’ve been sitting tight since we last met. Well, fasten your seatbelts now because it’s time for our first ride together. 

The journey’s a bit long so let’s talk while we get there!

How well do you know your financial terms? This is a safe zone and trust me I’m no one to judge really, my vocabulary is…nothing to write home about.

Well if you’re like me you’re probably wondering, when did the world grow two feet that it’s starting to walk and leave me behind? What are these people even saying?

Not to worry, learning has no expiry date. I dey for you.

If you don’t belong to this group (side eye) don’t hurry off just yet, let’s see how many of these terms you can beat your chest for and say you remember.

Kicking it off with the simple things:

1. Asset: Financial assets are tools that can help you build wealth and achieve your financial goals. It’s basically anything super valuable that a person owns or has by his/her side. Just Like you on this journey with us. It's also something that can make you richer, happier, or more successful.

It's important to understand that "the best" asset can vary greatly depending on your circumstances, risk tolerance, and financial goals. However, some good examples of assets you might want to invest in, in case you were wondering, are Business assets: Side hustles and gigs, reselling. Networking: Mentors, investment groups, career connections (you know a little birdie told us Global Money Week is on the horizon), Money investments: Stocks, real estate, crypto (wisely), and of course, Human capital: Invest in your skills and make your gifts work for you.

2. Profit (Net Income) – Your profit Net Income is the money you have left after deducting expenses from your revenue. To break it down, Imagine You Throw a Party… You decide to host the biggest owambe (party) of the year. You sell tickets, set up a cool vibe, and charge people at the gate. Your Money In ( Revenue) is ₦500K from ticket sales. Yass, money is rolling in

but hold up a bit. Your Money Out (Expenses) Because you had to spend money to make this party lit:

• DJ & sound – ₦100K
• Food & drinks – ₦150K
• Decorations & venue – ₦100K
• Bouncers (so no uninvited guests wahala) – ₦50K

Total Expenses = ₦400K. Now to your actual profit (a.k.a. Net Income): After all the spending, you’re left with:₦500K (Revenue) - ₦400K (Expenses) = ₦100K (Profit) That ₦100K? That’s your net income! It’s the real cash that you get to keep after covering all the necessary costs. It’s like ordering a food tray, sharing some with your guys (expenses), and still having enough to enjoy for yourself (profit)! Super tasty!

3. Return on Investment (ROI) – ROI is a measure of profitability that compares the gain from an investment to its cost. It's a way to figure out if something you invested in was worth it. You’ll often hear terms like Did you get a good "return" on your "investment"? ROI helps you decide where to put your money, time, and effort so you don’t waste resources. Invest in things that bring money, knowledge, or growth, not just vibes!

Do these terms look familiar or simple to learn? Hmm, I bet you’re doing well so far. Let’s crank up the heat a little.

4. Liquidity: Liquidity is how easily an asset can be converted to cash without losing value. Think of it like this:

Cash (Naira): This is the most liquid asset. You can use it anywhere, anytime.
Money in your bank account: Very liquid. You can withdraw it from an ATM or use it for online transfers quickly.
Your phone: Less liquid. You need to find a buyer, negotiate a price, and then get the cash.
Land or property: Even less liquid. Selling land can take a long time and involve a lot of paperwork.

Why is liquidity important? For starters, you need it for everyday life

You need liquid cash to pay for things like food, transportation, and airtime. If you have an emergency, you need to be able to access cash quickly, and let’s be honest it is not fun being stranded. So Gen Z Money Hack: Always Keep Some Liquid Cash! Because, let’s be real, emergencies don’t wait for "buyer found" notifications

5. Compound Interest:– You know that feeling where you’re folding laundry and you find some money in your jeans, well that’s the energy ‘Compound interest’ brings to the table. Compound interest is money that makes more money over time. If you save or invest, your returns grow on top of previous returns. It’s why “delayed gratification” is a real hack.

6. Last but not least, we have Debt Trap (dundundun!!!) – A debt trap is When you’re caught in endless borrowing because loan apps won’t stop sending “PAY UP OR WE’LL EMBARRASS YOU” messages. A.K.A. why financial literacy is key.

Well, Lookie here! We’ve arrived and today’s mission has come to an end. Did you notice? Do you notice how much knowledge you’ve gained in such a short trip?

Well then this mission is complete and if you haven’t guessed it yet, this trip was all for you, you’re the subject of today’s mission. 

Look at you! You now have some new Finance words in your vocabulary! You can now speak at the table or even better, apply them to your life!

How cool is that?

Super cool

So, Until next time! Dare to learn. But in the meanwhile, stick around, it’s ‘Global Money Week’ season and we have a buzzing list of activities packed for you. Check any of our AIESEC local committees around you and join in on the fun!