UK Personal Finance Glossary

APR (Annual Percentage Rate): The total yearly cost of borrowing on a credit card, loan or overdraft, expressed as a percentage. Includes interest plus standard fees.
Bank holiday: A public holiday in the UK when banks are closed. Affects when payments clear and when bills get taken.
Budget: A plan for what you'll do with your money over a set period, usually a month. A working budget tells you what's safe to spend, not just what you spent.
Carer's Allowance: A UK benefit for people who care for someone at least 35 hours a week. Worth £81.90/week as of 2025.
Cashflow: The movement of money in and out of your accounts. Positive cashflow means more comes in than goes out.
Child Benefit: A UK payment for parents and guardians of children under 16 (or under 20 in approved education). Currently £25.60/week for the eldest child.
Council tax: A monthly charge collected by local councils to pay for services like rubbish, schools and roads. Based on your property's valuation band.
Credit score: A number lenders use to decide whether to lend to you. Higher is better. UK scores come from Experian, Equifax and TransUnion.
Direct debit: An automatic payment you authorise a company to take from your account on a set date. The amount can vary.
Emergency fund: Money set aside for unexpected costs. UK guidance suggests 3–6 months of essential outgoings.
ESA (Employment and Support Allowance): A UK benefit for people unable to work due to illness or disability.
Fixed costs: Outgoings that stay the same each month — rent, mortgage, council tax, broadband.
Gross income: Your total earnings before tax, National Insurance and pension are deducted.
Household budget: A budget shared by everyone living together. Tracks combined income and shared bills.
Impulse spending: Unplanned purchases driven by emotion or convenience rather than need.
Irregular income: Earnings that vary month to month — freelance work, zero-hours contracts, commission.
ISA (Individual Savings Account): A UK savings or investment account where interest and gains are tax-free. Annual limit is £20,000.
Minimum payment: The smallest amount a credit card company will accept each month. Paying only this keeps you in debt for years.
Net income: Your take-home pay — what's left after tax, National Insurance and pension contributions.
Open Banking: A UK regulation that lets apps read your bank data with permission. Powers most automated budgeting apps.
Overdraft: A pre-arranged borrowing facility on a current account. Interest applies when you go below zero.
Payday: The day your salary or benefits hit your account. The most important date in any monthly budget.
PIP (Personal Independence Payment): A UK benefit for people aged 16+ with long-term health conditions or disabilities.
Recurring bill: A bill that comes out every month or year on a set schedule. Subscriptions, utilities, insurance.
Safe-to-spend: What you can spend on non-essentials this month after income, bills and savings are accounted for. The Life Buddy calculates this automatically.
Sinking fund: Money you set aside gradually for a known future expense — Christmas, car insurance, holidays.
Standing order: An automatic payment you set up for a fixed amount on a fixed date. Unlike direct debit, the amount never changes.
Subscription: A recurring payment for a service. Streaming, software, gym memberships.
Sweep: Automatically moving leftover money from a current account into savings at the end of the month.
Universal Credit: A UK benefit replacing six older benefits including JSA, Housing Benefit and Working Tax Credit. Paid monthly.
Variable costs: Outgoings that change month to month — groceries, fuel, eating out, entertainment.
Zero-based budget: A budget where every pound has a job, so income minus outgoings equals zero. Often heavy maintenance.

UK money jargon, decoded

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