IELTS vocabulary: Money

These 12 B2–C1 words and collocations are useful for Writing Task 2 and Speaking Part 3 when discussing personal finance, public policy and economic inequality.

disposable income noun: The amount of money a person has left to spend or save after paying taxes and essential bills.; “After paying rent and utilities, Hana's disposable income is barely enough to cover occasional meals out.”
cost of living noun: The general level of prices for basic goods and services (housing, food, transport) in a place.; “The rising cost of living in Crestford has made it hard for recent graduates to stay in the city.”
fiscal policy noun: Actions by a government regarding taxation and public spending to influence the economy.; “During the recession, the government used expansionary fiscal policy, increasing public investment to create jobs.”
austerity measures noun: Policies that reduce government spending and services in order to decrease budget deficits.; “When the country introduced austerity measures, funding for local libraries and parks was cut.”
wealth gap noun: The difference in income and assets between the richest and poorest groups in society.; “Many analysts warned that a growing wealth gap could undermine social cohesion in the region.”
financial literacy noun: The knowledge and skills needed to manage money, such as budgeting, saving and understanding credit.; “Teaching financial literacy in secondary schools would help young people avoid damaging debt later on.”
welfare system noun: Government programs designed to provide financial support or services to people in need.; “Reforming the welfare system to focus on job training could help recipients become self-sufficient.”
to subsidize verb: To provide financial support (often by a government) to reduce the cost of a service or product.; “The council agreed to subsidize bus fares for students to encourage public transport use.”
to default on verb phrase: To fail to meet the legal obligations of a loan or debt, such as missing payments.; “After the factory closed, several families feared they might default on their mortgages.”
capital investment noun: Money spent on long-term assets or projects (factories, equipment, infrastructure) intended to generate future returns.; “Increasing capital investment in broadband infrastructure helped the town attract new businesses.”
regressive tax noun phrase: A tax that takes a larger percentage of income from low-income earners than from high-income earners.; “Critics argued that a flat sales charge would act as a regressive tax, affecting poorer households more severely.”
to tighten one's belt idiom (verb phrase): To reduce spending and live more frugally because of financial difficulties.; “When Mark lost his bonus, he had to tighten his belt and postpone buying a new car.”