Funny Money Words

The world of finance has an awful lot of jargon attached to it.

There’s far too much language gatekeeping, or people who use that jargon effectively in order to scare everyone away from investing. On Wall Street, you have to talk the talk if you want to walk the walk.

And, while it can be difficult to learn some of this lingo, the language itself tells a little story about how it came to be, like the word salary. Fairly recently, I pointed out that the word salary comes from the Latin word salarium, which was the little bag of salt (or the allowance) that each Roman soldier received.

Salary is a bit tricky, but some of these terms are pretty easy to figure out. For instance, there’s little mystery behind the word dividend, which is when a company pays you a fixed amount of money out of its available cash. This word traces its root to Latin, like so many of our modern money words. The original word dividendum means “thing to be divided.”

Less obvious is the word stock itself. Stock is such a common word in English, we hardly think that it might have meant something other than fractional ownership in a company, but it bears to keep in mind that finance was more physical and material in the past, and the further back in time, the closer to this more physical nature you get.

Stock comes from Old English. It means “tree trunk”, and the clear implication is that the stock represents the very heart of the company, from whence the branches come.

In the stock market, you have a bit of a stereotype that describes the two broad types of investors: bulls, who are generally very optimistic about the future, and bears, who tend to be pessimistic. I’ve written about bulls in china shops, but not about bulls in the stock market. This is, of course, a physical analogy once again—bulls tend to charge and thrust their horns upward, like a rising stock chart:

Bears, on the other hand, tend to strike downward with their paws, so they make sense as a descriptive term for when the market is going down.

An even better example of this physical foundation for finance is the word bank. This word is even more familiar to most people than the word stock, and it’s probably one of the very first money-related terms we all learn. Bank comes from the Italian banca, which translates into “bench.”

The type of bench we mean here is the kind where money-changers and merchants did their business. That’s why we call them banks today.

There’s more, too: whenever one of these bankers ran out of money, his bench would be physically broken as a symbol of his inability to continue business. Banca rotta—”broken bench”—eventually evolved into the English word "bankrupt." See what I mean about those physical origins?

Mortgage, too, is a very common word in English. People understand that in order to own a house, most people need to borrow more money than at any other point in their lives, so this sort of loan deserves a very weighty word. Perhaps, in order to underscore the seriousness of such a loan, the word should reflect this incredibly serious nature of the venture.

Mortgage comes from Old French, and the two words “mort” and “gage” mean something like “death pledge” when you put them together. Death, you say? We’re talking about the death of the loan, not the borrower! Once it’s paid off, the pledge is said to be dead.

Like mortgage, the word finance itself has a bit of a morbid origin story. It only comes from one word: finis, which is Latin for… well, you probably guessed it: finish. Finance means there is a conclusion—a finish—to the debt that’s owed. Over time, the word just kept expanding to mean all things money and credit.

Speaking of credit, that word’s origin is really interesting to me. I hope you’re sitting down, because credit also traces its roots back to Latin. Credere means to trust, and at its core, credit is all about the trust that your money will be paid back.

This very trust is at the core of our financial system, and it’s tough to develop a high level of trust when there’s so much jargon flying around.

Wall Street lingo can seem intimidating, but we should always keep in mind the parable of the drunken octopus: we can figure this stuff out if we want to, and it’s not that hard. Give yourself permission to be curious first, and then dive into anything you want to understand better.

Demystifying jargon is incredibly empowering, isn’t it?

Now, tell me: are you already familiar with much of this terminology? If you work in finance, how did I do breaking down the definitions? If you don’t, do you feel like you have a somewhat better understanding of some of the common jargon? What are some good ones I’ve missed?