Budgeting Basics
This type of expense stays the same every month.
Fixed Expense
A bank account used for frequent deposits and withdrawals.
Checking Account
The original amount of money borrowed.
Principal
A share of ownership in a company.
Stock
The amount paid regularly for insurance coverage.
Premium
Money left over after expenses are subtracted from income.
Net Income or Budget Surplus
Interest earned on both the principal and previously earned interest.
Compound Interest
This score helps lenders decide whether to approve a loan.
Credit Score
A loan to a company or government that pays interest.
Bond
The amount you pay out of pocket before insurance begins to pay.
Deductible
A plan that shows expected income and expenses over time.
Budget
This fee may be charged if you spend more money than you have in your account.
Overdraft Fee
The interest rate that includes fees and reflects the true cost of borrowing.
APR
Money earned from owning stocks.
Dividends
Insurance that helps protect your belongings if you rent a home.
Renters Insurance
Expenses that change from month to month, like groceries or gas.
Variable Expenses
A rate that shows how much interest is earned on savings in one year.
APY
A long-term loan used to purchase a home.
Mortgage
Spreading money across different investments to reduce risk.
Diversification
Insurance that covers damage you cause to others.
Liability Insurance
These expenses are optional and based on choices rather than necessities.
Discretionary Spending
A graph that best models compound interest over time.
Exponential Function
This type of function often models total cost of a loan over time when payments are constant.
Linear Function
The likelihood that an investment will lose value.
Risk
A situation where insurance changes behavior because risk is reduced.
Moral Hazard