EverFi Financial Literacy - Savings Module

The Rule of 72

A method for estimating how long it will take compound interest to cause a principal to double by dividing the interest rate by 72.

Compound interest

Interest that is generated, not only from the money you put into an account, but also on the interest you make on that money.

Budget

A plan of how you will spend the money that you make or receive.

Savings accounts

A type of savings vehicle in which you earn interest on the principal, usually without minimum balance requirements but lower interest rates.

Certificate of Deposit

A type of savings vehicle in which you put your money away for a certain amount of time, called a term, to allow your principal to earn interest.

Money Market Savings Account

A type of savings vehicle that usually requires high minimum balances but offers higher interest rates.

Savings plan

A way to save money for the long-term, which for most people means retirement.

Savings vehicles

Accounts designed to let you set aside money that is separate from your checking account.

Expenses

Anything you spend money on.

Interest

The fee someone pays to be able to borrow money.

Income

The government defines this as any form of money, property, or services that you receive.

Interest Rate

The percentage of interest you either make or pay on a principal

Principal

The sum of money you put into an account or the amount of money (minus interest) you owe on a debt.