Choose to Save Vocabulary List

Emergency Savings

Cash set aside to cover the cost of unexpected events. (Normally about 6 months of income)

Compound Interest

Earning interest on interest.

Trade-off

Giving up one thing for another.

Liquidity

How quickly and easily assets can be accessed and converted into cash. (Cash --> checking accounts --> savings accounts)

Time Value of Money

Money available at the present time (today) is worth more than the same amount if received in the future.

Do It Yourself (D.I.Y.)

When you complete a task yourself rather than paying someone else.

Pay Yourself First

Saving for the future by putting money aside before paying regular monthly bills or using income for discretionary purchases.

Saving

Accumulation of excess funds by intentionally spending less than you earn. (Action)

Interest Rate

Percentage rate used to calculate interest.

Savings

Portion of income not spent on consumption (Noun)

Principal

The original amount of money saved or invested.

Interest

The price paid for using someone else's money.

Consumption

The purchase of goods and services.

Opportunity Cost

The value of the next best alternative that must be forgone as a result of a decision.