Financial Wiki
Financial terms explained simply — in language you understand.
50-30-20 Rule
The 50-30-20 rule is the world's most famous budgeting rule. It splits your net income into three simple categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment. Developed by Elizabeth Warren and her daughter Amelia Warren Tyagi.
Accumulating vs. Distributing
ETFs come in two variants: accumulating ETFs automatically reinvest dividends (your money grows faster through compound interest). Distributing ETFs pay dividends to your account (you receive regular cash).
Brokerage Account
A brokerage account (Depot) is an account where your securities (stocks, ETFs, bonds) are held. Without one, you cannot invest — it is the counterpart to a checking account, but for investments instead of payments.
Budget Rules
Budget rules are simple formulas that tell you how to split your net income. The most famous is the 50-30-20 rule. But there are better ones.
Child Benefits
Child benefits are government payments that families receive for each child. For most families, it is a fixed part of their income — which is why we put it in the income category in BudgetHeld. But thinking long-term, it is the perfect opportunity to provide for your child's future. If possible: set aside as much as you can to give your child a head start in life.
Compound Interest
Compound interest means you earn interest on your interest. Your money doesn't grow linearly but exponentially — like a snowball rolling downhill, getting bigger and bigger.
Conscious Spending Plan
The Conscious Spending Plan is a budgeting method based on the idea that you don't need to spend less — you need to spend smarter. BudgetHeld is essentially a hybrid: the goal is to tell every euro what to do and reach zero. At the same time, we take the flexibility of the Conscious Spending Plan and reduce the effort dramatically. It is not about maximum control — it is about awareness and automation.
Credit Score
Your credit score is your financial reputation — it tells banks, landlords, and phone providers how reliably you pay your bills. The better your score, the easier you get loans, apartments, and contracts.
Diversification
Diversification means spreading your money across different investments so that the loss of any single position doesn't endanger your entire wealth. The basic rule: don't put all your eggs in one basket.
Dividend
A dividend is a profit distribution that a company pays to its shareholders — usually once per year or quarter. If you own stocks or a distributing ETF, you regularly receive money in your account without selling anything.
ETF Savings Plan
An ETF savings plan is an automatic, regular investment into an exchange-traded index fund. Ideal for anyone who does not want to constantly deal with stocks and financial markets — but simply wants to build wealth conveniently. Set it up once, then it runs.
Expense Tracker
An expense tracker is a log of all income and expenses — traditionally on paper, today usually as an app. The problem: very few people manage to maintain daily routines. An expense tracker forces you to list your spending every single day. Most people fail. That leads to frustration — and your finances suffer.
Extra Repayment
An extra repayment is an additional payment on your loan — beyond the regular monthly installment. It reduces the remaining debt faster and saves you interest.
Financial Buffer
A financial buffer is money you've set aside for unexpected expenses — car repair, broken washing machine, sudden job loss. It gives you the freedom to stay calm in stressful situations instead of panicking.
Fixed Cost Ratio
The fixed cost ratio is the percentage of your net income spent on living costs — housing, car, and other recurring expenses. It tells you whether you're living within your means.
Guilt Free — Guilt-Free Spending
Guilt Free is money you can spend without a bad conscience — on eating out, hobbies, electronics, trips, anything that brings you joy. It's not a luxury, it's a deliberate part of your budget.
Household Budget
A household budget combines all income and expenses of a household — not per person, but for the whole family. Whether both earn or only one: the money goes into one pot, the budget distributes it.
Inflation
Most people only became truly aware of inflation through the interest rate hikes following COVID. Before that, the topic barely existed — prices rose slowly, nobody noticed. Since then, we all feel the rising costs. Some more, some less, but it has become real. That is exactly why it is important to engage with investments — whether an ETF savings plan or something else. Because money just sitting in your account loses value every year.
Living Costs
Living costs are all expenses you need to live — housing, car, groceries, insurance, phone, clothing. Everything you can't simply skip.
Monthly Budget
A monthly budget is a plan for your money — before the month starts. You decide in advance how much goes to housing, groceries, saving and fun. Most budget apps are actually expense trackers. The difference? An expense tracker lets you enter amounts. A budget forces you to really engage with your finances.
Net Income
Your net income is the amount that lands in your account after taxes and social contributions are deducted. This is the number that matters — your budget is always based on net, never gross.
Overdraft
An overdraft is the ability to spend more than you have in your checking account, going into negative balance. Sounds convenient — but it is one of the most expensive forms of credit. Overdraft interest rates typically run 10–15% per year.
Repayment Rate
The repayment rate is the amount you pay monthly to pay back a loan. It consists of two parts: principal (debt reduction) and interest (cost of the loan).
Reserve / Buffer
The reserve is the amount left after subtracting all expenses, saving, investing and guilt free. In most budget tools, a high reserve is good. In BudgetHeld, it's different.
Return on Investment
Return is the profit you make from an investment — expressed as a percentage per year. It tells you how much your invested money is working for you.
Savings Rate
Your savings rate says more about you than your salary. It is the most important metric for your financial success — the percentage of your net income that you set aside each month. Whether you earn €2,000 or €5,000: if you save nothing, you build nothing.
Stock
A stock is a share of ownership in a company. When you buy a stock, you own a small piece of that company. If the company grows in value, your stock grows too. If it declines, so does your share.
TER (Total Expense Ratio)
The TER is the annual cost ratio of a fund or ETF — it tells you what percentage of your invested money is deducted each year for management, licensing, and operations. For ETFs typically 0.1–0.5%, for actively managed funds often 1.5–2%.
Wealth Building
Wealth building means systematically saving and investing money so your wealth grows over time. The most important thing besides starting is sticking with it. Most people never get to enjoy the compound interest effect because they quit too early. It takes a while before you really see it — but once the ball starts rolling, there is no stopping it.