SUMMARY (using brevity and METAPHORS FOR humor)
1 Accounting > Recording and counting beans. Reporting and communicating on their performance while ensuring they are double-entered accurately. Each bean is entered twice. Got it?
2 Active Income > You do something to earn it.
3 Affluenza > The disease of depression, dissatisfaction and lack of fulfillment of the rich or wannabe rich.
4 Add Value > Contribution to increasing the value.
5 Amortization > Spreading the cost over time.
6 Appreciate > Rising in value. Whatever you appreciate increases in value.
7 Asset > Something of value.
8 Asset Class > Grouping all your assets by what they have in common.
9 Blame Game > The common practice of assigning blame when things go wrong or money is lost.
10 Book Value > Net value in the accounts after deducting what you owe.
11 Budget > A forecast of where your money comes from and goes to.
12 Business > A money-making machine.
13 Business Owner > The owner of a money-making machine.
14 Buy-and-Hold > You buy a cow for $10 and keep it for life.
15 Buy-and-Sell > You buy a cow for $10, when the price goes up you sell it as soon as possible.
16 Capital > Money and its equivalent.
17 Capital Gain > You buy a cow for $10 to produce milk. You sell the cow a year later for $15. Your Capital Gain is $5 (the sale price of $15 less the cost of $10.) Any money you collected from sales of milk, is your income.
18 Capitalism > The system of private ownership and free enterprise. You can buy, sell, rent, milk, as many cows as you want.
19 Capitalize > You borrow $10 from a friend to buy a cow for $10. You pay your friend via a 50% ownership in the cow. You do the work. Your friend does nothing. You have capitalized the cow and converted your debt into equity. You own 50% of the cow. Your friend owns 50% of the cow. The seller of the cow has $10.
20 Cash > Money on hand.
21 Cash Cow > You buy a cow for $10, and it produces milk and a baby calf every year for life. You sell each calf for $10, and the milk for $10. Based on $10 of capital invested, the cow makes you $20 a year.
22 Cash Flow > Money in and money out.
23 Cheap > Low cost, low value, low price. A cheap cow produces low-quality milk and low-quality offspring.
24 Commodity > No added value, commonly available item from many sources.
25 Compound Interest > Interest on principal and interest on interest until your head explodes.
26 Consumer Price Index > The basic stuff you need goes up and up and up each year. This tracker proves it.
27 Consumption > Your uncle sadly passes away and leaves you a cow. You feel sad. You send the cow to the butcher and distribute the meat to your family. You feel good, and it is right to share, isn’t it? The cow has been consumed. Alternatively, you keep the cow, sell the milk for $10 a year, and each year it has baby calves, you sell them for $10 each. You distribute $10 to family and buy an additional cow each year with the other $10. Each year there is more to distribute.
28 Conventional Wisdom > Generally accepted beliefs, ideas, and opinions that are often wrong!
29 Credit > Trust that you will pay later.
30 Currency > Money or its equivalent that you can use as a medium of exchange.
31 Debt > What you owe. Money, gratitude, etc.
32 Default > Two people agree to do something, one doesn’t do as agreed. They are in default.
33 Deflation > The value is going down!
34 Depreciation > The cost of an asset is expensed over time.
35 Diversification > You diversify your investment portfolio by buying a cow, some gold, some foreign currency, some government bonds, some utility company stock, and some Facebook stock. If the cow dies, you won’t lose much compared to the total value. If Facebook underperforms on dividends, your overall return on investment is OK, because it represents only a portion of the total.
36 Dividend > You sell the milk of ten cows for $10 each per year, for total sales of $100. It costs you $5 per cow per year to feed, house and maintain them, making a total profit of $50 per year. You have five shareholders including yourself. You pay a $5 dividend to each shareholder and keep the remaining $25 to buy two additional cows for $10 each, and spend $5 on a shareholder barbecue to celebrate.
37 Doodad > Shit you don’t need.
38 Dollar Cost Averaging > Buy the same thing over time with the price going up and down and averaging out the price.
39 Due Diligence > Doing your homework. Trust but verify.
40 Economic > Everything to do with money.
41 Economic Freedom > Free from being told what to do around money.
42 Economy > The sum total of all the money transactions in the world, country or region.
43 Employ > Someone hires you to do something they want to be done.
44 Entitlement > You have one cow. You feel your parents didn’t give you enough cows. You feel the world owes you more cows and you try to take them from everyone you meet. You demand reimbursement. You are special.
45 Entrepreneur > An obsessed person who takes lots of risks to create a new venture with a 95% chance of failure.
46 Ephemeralization > Doing more and more with less.
47 Equity > Your ownership interest. If you have equity, you have ownership vs debt which is an unpaid obligation to pay.
48 Exchange > I give you something and you give me something.
49 Expense > Money going out. It is gone.
50 Fair Value > You have done your research and find a prize winning cow for sale for $25 when most cows sell for $10. Both yourself and seller know the value of the cow and agree on $25. He happens to be your brother in law, however, the transaction is conducted at arm’s length as you would with anyone.
51 Financial > Everything to do with money.
52 Financial Freedom > No need to work for money.
53 Financial Literacy > Understanding everything to do with money.
54 Financial Mobility > Increasing your inflow into a higher category than it was before, compared to everyone else. Moving up in status.
55 Financial Plan > A lifetime master plan to make, spend, keep, grow and give it away.
56 Financialization > Farming cows and making widgets are out of fashion, replaced by making money from money. The role of finance in our everyday lives and as a % of GDP has increased while becoming more and more sophisticated.
57 Flow > Struggle isn’t flowing. The more flow the greater the current. Got it?
58 Freedom > Do what you want, when you want, with whom you want, however you want. As long as you don’t impinge on the rights of others.
59 Fundamentals > All the basics.
60 Futures > A bet on what will happen in the future.
61 Gamble > A risk you take with a great certainty of failure with no value added.
62 Get Rich Quick > A scheme to make lots of money in a short period of time with a small outlay and low risk, where you work 3 hours a week in your underpants. They sell you using fast talk, sleazy tactics and lie their pants off.
63 Globalization > The process of becoming a global village with everyone trading with and exchanging culture with everyone.
64 Greed > Insatiable appetite for more and more and more.
65 Good As Gold > Trust that can be relied upon.
66 Good Life > A virtuous, rewarding and fulfilling life that is full of meaning, purpose, and passion.
67 High-Value Activities > Doing the shit the matters most.
68 Income > Money that comes in. You own a cow and sell its milk for $10 a year. Your income is $10. You sell the cow for $10, which is cash from the sale of an asset (not income.)
69 Inflation > The cost is going up, and up, and up.
70 IPO > Initial Public Offering. Allowing the public to buy shares in an overpriced asset while the insiders make a zillion dollars.
71 Intellectual Property > All assets created by the intellect, creativity. Intangible assets.
72 Invest > To put money, time, and energy in.
73 Investment > The process of putting money, time, and energy in.
74 Investment Advisor > A salesperson who sells you on a plan to buy lots of investments from them so they make lots of commission.
75 Investment Vehicle > It will help you get there in comfort, speed, or safety.
76 Investor > A person who puts money, time, and energy in.
77 Job > Something you are engaged to do for self or others.
78 Leverage > A small effort gives you a huge result!
79 Liability > All debts and financial obligations. Some people are liabilities too.
80 Licensing > A paper agreement to pay someone for their ideas.
81 Lifestyle Inflation > Increasing your spending when your income goes up.
82 Liquidity > Cash is the most liquid. Cows have to be sold to convert into cash. Real estate takes a long time to sell and convert into cash, however, a loan can convert some of its value into cash.
83 Loss > It is gone and it isn’t coming back.
84 Loss Leader > You lose money upfront to make money later.
85 Monetize > Everyone loves your cupcakes. You have a special recipe from your grandmother. You find yourself baking more and more. Your friend works for the world’s largest baking company, they love them, license your recipe and pay you $1 million for using it.
86 Money > Paper, plastic, and digits on a computer screen that people sell their souls to get.
87 Money Pit > You buy a boat to go sailing every weekend. Starts as a wonderful, practical idea. You end up sailing once a year, while endlessly paying doc fees, maintenance fees, insurance, repairs, etc. while the value of the boat goes down.
88 Niche > A small, profitable segment of the market. Most farmers own Friesian cows that produce large volumes of milk. You decide on less known Jersey cows because they require less work and produce higher profits from lower volumes.
89 Obligation > An emotion that someone has manipulated you into feeling if you don’t do it.
90 Opportunity Cost > You have one bird in each hand, so you have two birds. The third bird gets away, so it is your opportunity cost.
91 Options > You buy or sell the right to buy or sell the third bird, even if you don’t have it.
92 Owe > A feeling that you have to do or give something.
93 Out of Exchange > I give you something and you give me nothing.
94 Paradigm Shift > Your mind is blown and you can’t put it back together the way it was.
95 Partnership > You and one or more others are in the same boat.
96 Passive Income > Income you set up and then do nothing for.
97 Portfolio > A collection of all your investments.
98 Private Equity > It is mine (private) and the public can’t buy or sell it.
99 Professional > A person who does the same thing so long they can do it on automatic pilot.
100 Profit > You buy a cow for $10, you buy a bull for $10, they have a calf which you sell for $10. Your profit is $10 and you still have the cow and the bull ($20).
101 Prospectus > A scary document that outlines all the risks of buying what they are selling, while making it look good. You can’t read the fine print.
102 Prosperity > Your cows and bulls are having calves like nobodies business and everyone wants to buy them. Everything is flourishing.
103 Rat Race > You are a rat. You work in an office. You get paid and give it all to the fat cat to stay in the race. You can’t quit or the cat will eat you. The rat with the most left over wins.
104 Real Estate > A deed title (piece of paper) that says you own or have the use of the land and everything on it. The more others want it, the more the piece of paper is worth.
105 Resource > Something you can use later. Rich people have a lot, poor people have very little.
106 Richland > A fictitious land where everyone is a rat in the miserable rat race. The rat feels superior to other rats, cats, and dogs.
107 Risk > The probability of failure. Every action has a probability of success, the greater the certainty, the lower the return. If I buy one cow, my probability of failure is greater than if I buy ten cows, because the risk is divided by ten.
108 ROI > Return On Investment. You buy a cow for $10, you sell it for $15, your ROI is 50%.
109 Rule of 72 > Just another damn rule. Divide 72 by the interest rate and you will know how long it takes to double your money.
110 Sales > You have a cow, you take its milk to market, you offer it to a buyer for $5, they accept and give you $5. That is sales.
111 Saving > The avoidence or reduction of expenditure or cost. Money saved for future use.
112 Scarcity > Resources are limited, human needs are insatiable. There are not enough cows to go around. The more people want cows and the less supply of cows there are, the higher the price of cows.
113 Securitization > The process of converting an asset (or debt) into marketable securities in order to sell them to investors. You have ten cows. You have ten neighbors who also have ten cows each. You package the total of 110 cows into a new business entity to hold asset-backed securities and sell them to investors for $1,100. The investor gets the proceeds from milk sales, while each farmer keeps the new baby calves.
114 Security > A financial or investment instrument. Collateral for a loan. You borrow $10 from a friend to buy a cow and offer the cow as security. If you default on the loan, your friend gets to keep or sell the cow.
115 Self-Employed > No one will hire you, so you create a job for yourself and become your own boss. You are both the rat and the cat.
116 Speculation > You hope it will go way up in price, you buy now intending to sell tomorrow. It goes down. You lose your pants.
117 Stock > Medieval kings put you in these wooden things when you were naughty. A piece of paper that says you own x share of a company.
118 Sunk Cost > You buy a cow for $10. It dies. You sunk $10. The jelly bean factory offers you $2 for it.
119 Taken Care Of > You want to do nothing and have someone else work to make money to pay your bills. Marry a rich person, inherit money, or marry a workhorse and obligate them into the rat race while you retire and pretend to be busy.
120 Thrive > Your cows are growing like crazy. They are having lots of baby calves. They look happy and play all day.
121 Time Poverty > You are a rat, with all the comforts of life and have no time to enjoy it. When you try to relax you dream of the cat chasing you.
122 Time Value of Money > A cow today is worth more than a cow tomorrow. Today is certain. Tomorrow is uncertain.
123 Timing > Making investments at a time when you think it will make you the most money. Buying an asset when you think it is low priced and selling it when you think it has peaked.
124 Unrecognized Asset > You spent ten years travelling for business to the world’s top cities and stayed in the best hotels. In your spare time, you collected a black book of the best places to go, things to do, restaurants, and contacts etc. Your friends try to convince you to publish it. You resist and think it’s worth nothing. You eventually give in, publish and bank $1 million.
125 Upper Limit > The maximum you feel good about receiving before you explode and blame the giver for giving you too damn much.
126 Value > What something is worth to a willing buyer and a willing seller. An observer will probably disagree.
127 Value Investing > You invest in something you believe is undervalued.
128 Venture Capital > Money invested in high-risk projects with a 95% chance of failure.
129 Wage Slavery > Selling your soul for money, like a slave, you have no choice. You are in debt with bills to pay. There is a cat behind the scenes. If you are not the cat, then you are the rat.
130 Waste > You inherit a cow from your uncle who passed away unexpectedly. You don’t know what to do with a cow, so you ignore it. The cow wastes away and dies. You have wasted the cow, the opportunity and the trust your uncle placed in you. It is gone for good. If you had invested a little time and energy to learn, you would have had free milk and income for life.
131 Wealth > A large number of cows that give birth to more and more cows.
132 Workaholism > You are addicted to the rat race and can’t quit. Your self-worth is measured by how busy you are.
133 Write-Off > You buy a cow for $10. It drowns in the river and is washed away. You write off the $10 because you will never get the cow or the money back.