What is a budget?
AnswerA plan for income and spending
A budget maps where money comes from and where it goes.
Money · Facts & stats
Finance facts & stats
7 fact-checked facts about personal finance basics and financial history, each with the reason behind it. 5 more are in today's round and join this page after it closes.
The basics
What is interest?
AnswerThe cost of borrowing money, or the return earned on savings
Borrowers pay interest; savers earn it.
Going deeper
What is compound interest?
AnswerInterest earned on both the original amount and past interest
Compounding makes balances grow faster over time.
What does the Rule of 72 estimate?
AnswerHow many years it takes money to double at a given rate
Divide 72 by the annual rate to estimate doubling time.
In finance, what does diversification mean?
AnswerSpreading money across different types of assets
Diversification reduces the impact of any single loss.
Expert level
Which 1776 book by Adam Smith is a foundation of modern economics?
AnswerThe Wealth of Nations
Smith's book described markets and the division of labor.
In finance, what does liquidity mean?
AnswerHow easily an asset can be turned into cash
Cash is the most liquid asset; real estate is much less liquid.
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