Savings Study Guide

These flashcards cover key concepts related to savings, including types of accounts, interest calculations, saving strategies, and financial concepts.

What are the types of savings vehicles?

Short term and long term accounts that differ in access and interest rates.

What is the difference between simple interest and compound interest?

Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal and also on the interest earned.

Why is having an emergency fund important?

An emergency fund provides financial security in case of unexpected expenses.

What is the FDIC?

The Federal Deposit Insurance Corporation, which insures deposits at banks.

What is the difference between saving and investing?

Saving is typically for short-term goals with low risk, while investing is for long-term growth with higher risk.

What is a strategy for saving?

Setting specific savings goals and automating transfers to savings accounts.

What does it mean to live paycheck to paycheck?

It means that a person spends nearly all their income on living expenses with little to no savings.

What does 'keeping up with the Jones’s' mean?

Trying to match the lifestyle or spending habits of one's peers or neighbors.

What are the benefits of using automatic transfers for savings?

Automatic transfers help ensure consistent saving and reduce the temptation to spend.

What should you consider when calculating the percentage to save to meet goals?

Evaluate your income, expenses, and specific savings objectives to determine an appropriate saving rate.