Glossary
The words that come up, in plain language.
| Term | What it means |
|---|---|
| Assets | Everything the household owns — cash, super, property, vehicles, investments |
| Liabilities | Everything the household owes — mortgage, loans, cards, study debt |
| Net worth (equity) | Assets less liabilities. What is genuinely yours |
| Envelope | A planned amount for one category of spending, entered at the frequency it really arrives |
| Surplus | Income no envelope has claimed. Reported, never assumed saved |
| Take-home pay | Gross salary less tax, Medicare levy, super sacrifice, deductions and any HELP repayment |
| Salary sacrifice | Money directed to super before tax, taxed at 15% in the fund instead of your marginal rate |
| Concessional contribution | A before-tax super contribution — employer, sacrifice, or personal deductible. Capped annually |
| Non-concessional contribution | An after-tax super contribution, from money already taxed |
| Preservation age | The age super becomes accessible on retirement — 60 for anyone retiring now |
| Account-based pension | A regular income stream drawn from a super balance, with an age-based minimum each year |
| Defined benefit pension | A pension paid for life from a scheme, indexed, with no lump-sum balance behind it |
| Reversion | The percentage of a defined benefit pension that continues to a surviving spouse |
| Deeming | The Age Pension income test assumes a rate of return on financial assets rather than counting the real one |
| Free area | The level of assets or income below which the full Age Pension is payable |
| Binding death benefit nomination | A valid instruction to a super fund about who receives your super. Often lapses after three years |
| Enduring power of attorney | Authority for someone to act on your financial affairs if you cannot. State-based |
| Executor | The person who administers your estate under your will |
| Indexation (HELP) | The annual 1 June increase to a study loan, at the lower of price or wage growth. Not interest |
| Offset account | An account whose balance reduces the interest charged on a linked loan, while remaining available |
| Amortisation | The way a loan’s repayments shift from mostly interest to mostly principal over its life |
| Today’s dollars | Figures with inflation stripped out, comparable with what money buys now |
| Hedonic adaptation | The tendency to adjust to a higher income within weeks and spend the difference |
| Diderot effect | The way one purchase pulls further purchases behind it |