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5.01 Vocabulary
Term | Definition |
---|---|
Compound interest | interest earned on interest |
Consumption | The purchase of goods and services |
Do it yourself | When you complete a task yourself rather than paying someone else |
Emergency savings | Cash set aside to cover the cost of unexpected events |
Interest | Price paid for using someone else's money |
Interest rate | Percentage rate used to calculate interest |
Liquidity | How quickly and easily assets can be accessed and converted into cash |
Pay yourself first | Saving for the future by putting money aside before paying regular monthly bills or using income for discretionary purchases |
Principal | The original amount of money saved or invested |
Saving | Accumulation of excess funds by intentionally spending less than you earn |
Savings | Portion of income not spent on consumption |
Time value of money | Money available at the present time (today) is worth more than the same amount if received in the future |