| A | B |
|---|
| Saving | Portion of income not spent on current consumption |
| Investing | The purchase of assets with the goal of increasing future income. |
| Interest | The price of money. |
| Interest Rate | Percentage rate paid on the money saved or invested money expressed as an annual percentage rate. |
| 70-20-10 rule | 70% is spent, 20% is saved, 10% is invested. |
| Cash Management Tool | A financial account used to assist with daily cash management including checking accounts, savings accounts, money market deposit accounts, certificates of deposit, and savings bonds. |
| Time value of money | A calculation which adjusts for the fact that dollars to be paid out or received in future are not equivalent to money paid out or received today because of compounding interest. |
| Compounding interest | Earning interest on interest. |
| Liquidity | The speed and ease with which an asset can be converted into cash. |
| Future value | The value of an asset projected to the end of a particular time period. |
| Certificate of deposit | An insured nterest earning savings intstrument with restricted access to the funds. |
| Money market deposit account | A government insured account offered at most depository institutions. |
| Checking account | A tool used to transfer funds deposited into the account to make a cash purchase. |
| Financial risk pyramid | An illustration which represents the trade-offsbetween risk and return for a number of investments. |
| Risk | Uncertainty the yield on an investment will deviate from what is expected. |
| Rule of 72 | A formula for giguring the number of years it takes to double the principal using compound interest. |
| Savings plan | A strategy for putting a portion of money from current income aside, which will not be spent on consumption, to reach a specified goal. |
| Savings account | An account to hold money not spent on consumption. |
| Principal | The original amount of money invested or saved. |
| Savings bond | A discount bond purchased for 50% of the face value from the U.S. Government. |
