Banking Concepts

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Money Market Account

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Works similarly to a checking account, allows checks, tied to markets, higher interest than savings, requires higher minimum balance.

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Example of Money Market Account

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Banks & credit unions

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Checking Account Features

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Most liquidity, pay bills, write checks directly, usually no interest rate, attached to debit cards.

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Annual Percentage Yield (APY)

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The return on investment after one year. Slightly higher than APR due to compounding.

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Interest Rate

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The amount a lender charges a borrower, a percentage of the principal.

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Dealing with Interest

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Deal with interest through a CD; you not only have to pay interest, you get it too.

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FDIC

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Federal Deposit Insurance Corp. Protects your money in case of a bank failure. Protects up to $250k.

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Medium Term Savings

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Medium term financial goals, usually set for 1-3 years; helps bridge the gap between short and long-term savings.

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Examples of Long Term Savings

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Buying a house

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50/30/20 Rule

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50% of income goes to needs, 30% to wants, 20% to savings and debt reduction.