Simple Interest
This is the original amount of money borrowed or invested, represented by the letter P in the simple interest formula.
What is the Principal?
This is a financial plan that tracks how much money you earn versus how much you spend; it ensures you don't spend money you don't have.
What is a Budget?
Unlike simple interest, which is only calculated on the principal, this type of interest is calculated on both the principal and any interest already earned.
What is Compound Interest?
When you use a credit card, you are essentially taking out one of these, which must be paid back to the bank, usually with interest.
What is a Loan?
This three-digit number, usually ranging from 300 to 850, tells lenders how reliable you are at paying back the money you owe.
What is a Credit Score?
If you invest $1,000 at a 5% simple interest rate, this is the total amount of interest you will have earned after exactly one year.
What is $50?
In budgeting, items like rent, groceries, and medicine fall into this category, representing things you must have to survive.
What are Needs?
If you have $100 and earn 10% interest compounded annually, you have $110 after one year; after the second year, you earn 10% of $110, giving you this new total.
What is $121?
This three-digit number, usually ranging from 300 to 850, tells lenders how reliable you are at paying back the money you owe.
What is a Credit Score?
This two-word term refers to a "just in case" fund—usually 3 to 6 months of expenses—saved to cover unexpected costs like a broken phone or a medical bill.
What is an Emergency Fund?
In the formula I = Prt, this variable must always be expressed in terms of years; for example, 6 months would be entered as 0.5.
What is Time (or t)?
If your income is $50 a month and your expenses are $65, your budget is said to be in this "D-word" state, meaning you are overspending.
What is a Deficit? (Also accept: Debt)
If a bank says your interest is "compounded quarterly," it means they calculate and add your interest this many times per year.
What is 4?
Unlike a credit card, which borrows money from a bank, this type of card takes money directly out of your bank account the moment you use it.
Debit Card
When you buy this, you are purchasing a small piece of ownership in a company, like Apple, Disney, or Roblox.
What is a Stock? (Also accept: Share)
A student takes out a simple interest loan of $2,000 at a 10% annual rate. After 3 years, this is the total amount (Principal + Interest) they must pay back.
What is $2,600?
Maya wants to buy a $400 gaming console. If she saves $25 every two weeks, it will take her this many months to reach her goal.
What is 8 months?
Known as the "Rule of 72," this mental math trick helps you estimate how many years it will take to double your money by dividing 72 by this specific number.
What is the Interest Rate?
If you only pay this "M-word" amount on your credit card bill each month, it will take much longer to pay off your debt and cost you significantly more in interest.
What is the Minimum Payment?
This "I-word" is something you pay for monthly to protect yourself from huge financial losses, like a car accident or a house fire.
What is Insurance?
To earn exactly $100 in interest over 2 years at a 5% simple interest rate, you would need to start with this initial principal amount.
What is $1,000?
While a monthly Netflix subscription is a fixed expense, a grocery bill or a water bill is known as this type of expense because the cost changes every month.
What is a Variable Expense?
Because compound interest grows faster over time, an investment of $500 at 5% interest for 2 years will earn this much more total interest than the same amount using simple interest.
What is $1.25?
This three-letter acronym represents the total yearly cost of borrowing money, including interest and any additional fees.
What is APR? (Accept: Annual Percentage Rate)
This economic term describes the general increase in prices over time, which means $1.00 today will likely buy less "stuff" 10 years from now.
What is Inflation?