Financial Terms and Concepts

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50-20-30 Rule

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A popular savings rule of thumb in which 50% of your income goes towards necessities, 20% goes towards saving and debt repayment, and 30% goes towards flexible spending.

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ATM

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Automatic Teller Machine. Allows a person to manage a bank account holder's funds through actions such as withdrawing or depositing money, viewing account balances, etc.

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Bank Statement

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A monthly document prepared by your financial institution which shows all of the transactions related to your account.

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Compound Interest

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Reinvesting earned interest back into the principal, so that interest is calculated on both the initial amount and the accumulated interest.

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Credit Card

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A card that allows the holder to make purchases without cash by borrowing money.

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Debit Card

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A card that is directly connected to your checking account; it enables you to conduct ATM transactions and to make purchases instead of using cash or writing a check.

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Deposit

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Money you put into your account

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Direct Deposit

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An automatic electronic deposit of net pay to an employee's designated bank account

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Emergency Fund

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Money set aside for unanticipated expenses or loss of income

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FDIC Insurance

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Protection provided by the Federal Deposit Insurance Corporation; protects the deposits of customers against loss up to $250,000 per account