Questions and Answers
What is net pay?
What is gross pay?
What is interest?
The price paid for the use of borrowed money
What is a checking account?
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What is a debit card?
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What is a credit card?
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What is principal?
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What is loan term?
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What is a savings account?
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What is compound interest?
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What is simple interest?
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What does it mean to invest?
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Study Notes
Personal Finance Key Terms
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Net Pay: The amount received in a paycheck after all deductions such as taxes, retirement contributions, and health insurance are taken out.
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Gross Pay: The total earnings before any deductions are made; it includes wages, bonuses, and overtime pay.
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Interest: The fee charged for borrowing money, typically expressed as a percentage of the principal amount over time.
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Checking Account: A deposit account held at a financial institution that allows for frequent withdrawals and deposits, used primarily for everyday transactions.
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Debit Card: A financial card that deducts money directly from the checking account when a purchase is made, providing instant access to funds.
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Credit Card: A card that allows individuals to borrow money up to a certain limit to make purchases, with the obligation to repay the borrowed amount along with interest later.
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Principal: The initial sum of money that is borrowed or invested, separate from interest or profits.
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Loan Term: The specified duration in which a borrower is required to repay a loan, which can vary depending on the lender and type of loan.
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Savings Account: A bank account intended for accumulating savings rather than for daily transactions, often earning interest on the deposited funds.
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Compound Interest: Interest calculated on the initial principal and also on the interest that has been added to the principal, resulting in interest-on-interest over time.
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Simple Interest: Interest calculated solely on the principal amount of a loan or investment, without compounding effects.
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Invest: The act of allocating resources, usually money, to an asset with the expectation of generating income or profit over time.
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Test your knowledge of key personal finance terms with these flashcards. Each card provides a definition to help you understand concepts like net pay and interest. Perfect for anyone looking to enhance their financial literacy.