Learn the Language: Savings | theSkimm
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Life comes at you fast. Which is why building savings should be at the first stop on your money journey. Right after Skimm’ng these important terms.

50/20/30: A popular budgeting rule that breaks down your paycheck so 50% goes toward basic needs (housing, groceries), 20% to saving and investing, and 30% for wants (Netflix, puzzles).

APY: Your yearly reward for saving money. It’s the total amount of interest you’ll earn on your bank deposits. Size matters, and bigger is better.

Related: Learn the Credit Basics Language

CD: Not how you listened to music in 1999. Stands for certificate of deposit. It’s a type of bank account that pays a lot of interest IF you don’t withdraw the money for a certain amount of time. Or else you’ll pay a penalty.

Emergency Fund: A savings account just for surprise expenses. Think: losing your job or a surprise medical bill. Shoot for at least three months’ worth of take-home pay. Side effects include sleeping like a baby.

FDIC: A bodyguard for your bank account. Uncle Sam wants you to trust the banking system. So if your bank fails or runs out of money, the US gov will step in and pay you back up to $250K. Thanks.

Gross Income: The total amount of money you earn before taxes or other deductions. Not actually gross at all.

High-Yield Savings Account: A bank account that pays a lot of interest, usually offered at online banks vs. old-school institutions. More bang for your buck. Literally.

Liquidity: How fast and easily you can get your hands on your money when you need it. Cash savings is as liquid as it gets. Things that aren’t: a home, art, jewelry, stocks, and anything else you can’t sell at a moment’s notice for at least what you paid.

Related: Learn the Homebuying Language

Net Income: How much of your gross (total) income you pocket after taxes and other deductions, like 401(k) savings and insurance premiums. Not as nice as your gross income.

Pay Yourself First: When you save money as soon as your paycheck hits...and before you do anything else. Like pay your bills or buy groceries. Future you says thanks.

Take-Home Pay: A less fancy way to say ‘net income,’ or the amount of money that hits your bank account after taxes are deducted from your paycheck. Look at this number when building your budget and deciding how much is realistic to save.

Related: Learn the Student Loans Language


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