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Key Terms

  • Updated

  1. Savings Account: A bank account that allows individuals to deposit and withdraw money while earning interest on the balance.

  2. Interest Rate: The percentage at which a financial institution pays interest on the money deposited in a savings account.

  3. Compound Interest: Interest earned on both the initial principal and the accumulated interest in previous periods.

  4. Emergency Fund: A reserve of money set aside for unexpected expenses or emergencies, providing financial security.

  5. Fixed Deposit (CD): A time deposit with a fixed term and fixed interest rate, typically offering higher interest than regular savings accounts.

  6. Automatic Savings: A system where a predetermined amount is automatically transferred from a checking account to a savings account at regular intervals.

  7. Liquid Assets: Assets that can be quickly converted into cash, providing flexibility for immediate financial needs.

  8. Budgeting: Planning and allocating funds for specific purposes, including savings goals, within a defined timeframe.

  9. IRA (Individual Retirement Account): A tax-advantaged account designed to encourage long-term savings for retirement.

  10. 401(k): An employer-sponsored retirement savings plan that allows employees to contribute a portion of their salary before taxes.

  11. Direct Deposit: The electronic transfer of funds directly into a bank account, facilitating automatic savings.

  12. Interest-Bearing Account: An account, such as a savings account, that generates interest on the deposited funds.

  13. Savings Goal: A specific target amount set for saving, often with a defined purpose, such as a vacation or a down payment on a home.

  14. Financial Planning: The process of setting financial goals, creating a plan to achieve them, and regularly reviewing and adjusting the plan.

  15. M-Shwari: A mobile banking service in Kenya that provides savings and loan products through the M-Pesa platform.

  16. Harambee Sacco: A Savings and Credit Cooperative (Sacco) in Kenya that offers financial services, including savings and loans, to its members.

  17. Chama: An informal savings group in Kenya where members contribute money regularly, and the accumulated funds are rotated among members.

  18. Fixed Deposit Account: A savings account with a fixed term and interest rate, often offered by Kenyan banks to encourage long-term savings.

 

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