How finances work

Budget

An estimate of a person's revenue (salary, gifts, etc.) and expenses (clothing, transportation, leisure, etc.). Use a budget to calculate if the money you are earning is enough to pay your expenses and save money.

Cooperative

An organization that belongs to its users. In a cooperative, services are adapted to the needs of its owner-users, who also share the profits. Desjardins is a cooperative and, as a member, you are a part owner of your caisse.

There are a lot more cooperatives in Quebec than you might think! See the alphabet list of cooperatives to find out about 26 of them.

Compound interest

When it comes to your savings, your best asset is your age. Surprising, but true! When you start saving early, and if you don't make any withdrawals for several years, you could end up with a tidy little sum. That is the magic of compound interest!

How does it work?

Interest on your savings are periodically added to your principal to generate more interest.

A few dollars a week or a month end up as a handsome sum if you let time do its work!

Have a look at how the magic of compound interest can work for you if you save $10 a week¹:

Weekly $10 contribution

Time	Principal invested	Interest	Total (principal + interest)	Appreciation of principal
After 10 years	$5,218	$2,250	$7,468	43%
After 20 years	$10,436	$11,726	$22,162	112%
After 30 years	$15,654	$35,346	$51,000	226%

This example is based on a 7% annual compound return.

Try the calculator to see how much your savings can earn you.

Credit

A sum of money loaned to a person to carry out a project, make a purchase or cover unexpected expenses. An agreement must be made between the lender and the borrower to determine how and when the debt will be repaid.

Credit card

A card used to make purchases now and pay for them later. There are no interest fees if you completely repay the amount you owe before the deadline on the statement of account.

Debit card

A card provided by a financial institution. It is used to carry out transactions at ATMs and to make purchases by direct payment. When you use direct payment, the sum to be paid is automatically transferred from your account to the retailer's account. A debit card can also be called an ATM card or a Desjardins Access Card.

To protect your money, you must enter a personal identification number (PIN) when you use a debit card.

Interest

A sum paid in addition to the loan amount when you borrow money or make a late payment on your account.
Interest is also money a financial institution gives you when you put money in it for a period of time. The interest rate is a percentage of the amount you invest that will be given back to you. It is set according to the duration of the investment.

Loans

A loan is an amount of money loaned out by a financial institution (the lender) to an individual (the borrower). There are different kinds of loans, such as loans to buy a house or car, student loans or loans for a personal project.

How do they work?

The borrower and lender agree on the amount of the loan, the repayment period and the interest rate (percentage of the loan plus principal).

For example, a $2,000 loan at 10% interest over two years costs $215. The borrower will have to pay the lender a total of $2,215.

Depending on the type of loan, borrowers may have to provide a downpayment, that is, an amount equal to a certain percentage of the borrowed amount. They must also prove that they are able to pay back the loan (by proving they have a job and earn a regular income).

Then, each month (or each week, depending on the terms of the loan), borrowers pay back a certain amount, plus interest. This is why it's important that you know how to save so you can avoid complications!

Member dividend

A sum paid by a caisse to its members. Member dividends are paid from the caisse profits. At the Annual General Meeting, the members decide how the profits will be redistributed.

Savings

The portion of an individual's income that is not spent and that is saved to carry out a project.

Stock market

On the stock market, people trade shares in a company. A share is a certificate that proves that someone owns part of a company. The stock market is a place where brokers meet to buy or sell shares for their different clients. Today, most trades (purchases and sales of shares) are done online. There are also place called “trading floors” where people can trade shares in person. Shares gain or lose value based on several factors, including the profits of a company, news that could affect the company, the economy, etc. People ask their brokers to buy or sell shares, hoping to make a profit.