MoneyU Glossary of Terms


MoneyU Glossary of Terms


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SAVINGS

Bottom Line

The bottom line is your monthly income less expenses.

Budget

The financial record you use to keep track of the money you earn, how much you spend and what you spend it on. Your budget also includes savings and how much you pay to your creditors.

Capital

Economic resource or resources that can be used to generate economic wealth.

Cash Inflows

Cash inflows are dollars (or relevant currency) that you receive on an investment. Cash inflows are a payback, or source of cash, on an investment. Cash outflows, o the other hand, are dollars (or relevant currency) that you spend or invest in order to earn a rate of return. Cash outflows are uses of cash. The interest rate that equates the cash inflows and outflows for a project, even one extending many years, is called the internal rate of return.

Cash Outflows

Cash outflows are dollars (or relevant currency) that you spend or invest in order to earn a rate of return. Cash outflows are uses of cash. Cash inflows, on the other hand, are dollars (or relevant currency) that you receive on an investment. Cash inflows are a payback, or source of cash, on an investment. The interest rate that equates the cash outflows and inflows for a project, even one extending many years, is called the internal rate of return.

Certificates of Deposit

(Also known as CDs.) Certificates of deposit, or CDs, are time deposits. CDs offer a guaranteed rate of interest for a specified term, such as one year. With CDs, you can choose from among various lengths of time that your money is on deposit, ranging from several days to several years. Once you pick the term you want, you will generally have to keep your money in the account until the term ends.

Compound Interest

Interest earned on interest. When interest is earned on an investment and that interest is reinvested, it becomes part of the principal of that investment. The next interest calculation is based on this increased principal. Compound interest results in a higher future value than simple interest. See also Rule of 72.

Cost of Living

The average cost of the basic necessities of life, such as food, shelter, and clothing; some locations, like New York and Los Angeles, have relatively high costs of living compared to the average.   It is important to take the Cost of Living into account when considering job pay in various locations.

Credit Union

A not-for-profit financial institution that is owned by its members. Credit unions offer many of the same services as banks at lower costs. They may also pay higher interest on deposits. To open an account at a credit union, you must qualify for membership.

Down Payment

The amount of cash that a purchaser needs to put toward the cost of a home, automobile, or other large purchase that is being financed (taking out a loan).

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