Choosing to Save

Marylin Willison

What is the difference between savings and investing?

Savings are a part of your income that isn't spent on consumption and investing is the hope in having a higher income.

What is liquidity?

Liquidity is how fast and easily an asset can be converted to cash.

What is net worth?

What you get when you subtract liabilities from assets.

What is an asset?

Anything that an individual owns that can be sold for cash.

What is a liability?

An obligation to settle a debt.

Interest and interest rates

Interest is an additional amount of money you have to pay when you pay someone back and interest rate is the rate of amount you have to pay.

How can you make saving automatic?

You can create a strict budget and save or you can put money aside in the bank after each paycheck.

What portion of your income should you save?

You should save part of your net pay since it is the leftover you money you have after taxes and deductions.