Basic financial literacy from DNotesEDU FInancial CalculatorDefinitions

Financial Literacy – Why it Matters

“The ability to understand how money works and how to manage it, is vital to everyone in order to be successful in life. Being equipped with the knowledge to navigate saving, investing, student loans, debt, taxes, retirement, etc, should be mandatory education starting at a young age, not an elective afterthought.”  –  Programmed to Spend

The High Cost of Financial Illiteracy

Without the knowledge necessary to make wise financial decisions, people often end up in serious debt trouble that can take a significant toll on their well-being. They may not understand the pitfalls of buying on credit, when you should and shouldn’t borrow money, or how high interest and fees can erode their wealth. If you don’t know the importance of credit scores, emergency funds, or how to make every dollar count, it is critical that you educate yourself. Without goals, plans, and budgets, there will be no saving or investing for the future. There is a direct correlation between financial literacy and the amount of wealth one is able to accumulate before retirement –  it doubles.

Setting Priorities

Being educated financially equips you with what you need to establish goals and to understand how to prioritize your spending. Without a plan, budget, and record keeping, most people remain blissfully unaware of where their money is going. It isn’t necessary to deprive yourself, you simply need to weigh the importance of what you spend money on. The average American spends almost 20% of their income on items that are wants and not needs, so there are choices to be made. Is it more important to you that you spend $300+ a month on coffee, eating out, partying, shopping, gym memberships, etc, or save/invest that money so you have the funds for your children’s education, to start a business, buy a house, fund your retirement, or to be prepared for an emergency. $300 a month invested for 30 years at 5% interest is $250,000, but $300 a month spent on coffee, partying, or eating out is just gone…

DNotesEDU Financial Calculator


DNotesEDU Financial Calculator is a multi-function 5-in-1 savings/investment calculator that allows you to solve for any one of the five variables. Any four of the following five values must be entered to solve for the fifth. The factor you are solving for will turn green after entering the other four values. It will stay green (solve mode), allowing you to see the results with various other value inputs. You do not have to refresh or start over in order to move from solving one function to another. Simply enter a value in the text box that was green, clear the one you wish to solve for, and press ‘Calculate’ again.

Initial Amount: Enter the present value or any lump-sum deposit you make before the monthly payments commence. Enter 0 (zero) if there is no balance, or leave blank if you wish to find how much you need right now in order to reach your goal.

Monthly Deposit: Enter the amount you are going to contribute every month, or 0 (zero) if you are not making monthly savings deposits. Leave blank if you wish to find the monthly savings required to reach a certain goal.

Interest: Enter the annual interest rate that you expect to earn (interest earned is compounded monthly), or leave blank if you wish to find the rate required to meet your goal. For reference, 10 and 20 year returns on various investments are provided on the right of this page. These should not be taken as a guarantee of future rates, especially with record low interest rates on fixed income investments.

Number of Years: Enter the number of years you have to save for your goal, or leave blank if you wish to find out how long it would take to accumulate the needed funds.

Future Value: Enter the $ amount of your goal, or leave blank if you want to calculate the future value of the other four value inputs.

Example: Suppose your goal is to reach a level of financial independence in 30 years that allows you the freedom to travel, have a small ‘hobby’ business that isn’t required to support you, and move to warmer location.

  • You have $10,000 saved and want to know how much you will accumulate if you save $250 a month for the next 30 years. 
  • You estimate that a balanced, somewhat conservative investment approach over that time period should earn a minimum 5% return. 
  • Enter: Initial Amount = 10,000, Monthly Deposit = 250, Interest = 5, and Number of Years = 30. 
  • After pressing calculate to solve, and finding out that the future value will be $253,609, you realize something needs to change in order to save sufficient funds for this goal. 
  • Recalculating using a monthly deposit amount of $500 (simply change text box from 250 to 500 and press calculate), adjusts the future value to $462,000. 
  • Changing the interest rate % to 6, which is still realistic, ups the final balance to $564,995. 
  • Keeping the same screen (all values the same including the 6% interest and $500 monthly changes), you decide you would like to know what you need to do differently to accumulate $1,000,000. 
  • All that needs to be done is to change the Future Value box from empty to 1,000,000, and remove any one of the other 4 values. 
  • For instance, if you clear the Initial Amount, the screen will turn green for solve mode, and when you calculate, you will discover that you need to start with $82,229 to reach your $1M goal. 
  • Return the Initial Amount to 10,000, clear the monthly deposit box, and press calculate to find out what your monthly savings would have to increase to (in this case $931). 
  • Return the Monthly Deposit amount to 500, clear the interest rate text box, and press calculate to reveal how high of an interest rate you would need to earn in order to save $1 million in 30 years (answer = 8.7%). 
  • Return the interest rate % to 6, clear the Number of Years box, and press calculate, to figure out just how long it would take to save that much if your goal date isn’t set in stone (38.4 years instead of your original 30).



Finance Definitions

Anti Money Laundering (AML)
The steps a financial services provider takes to watch for, discourage, and report possible money laundering. These steps are often legal requirements, such as the Know Your Customer (KYC) rule. Customers need to verify their identity in order to move funds to and from their accounts.
Anything of value owned by an individual or entity that has exchange value.
Business To Business (B2B)
The exchange of products, services or information between businesses, rather than between businesses and consumers.
Balanced Budget
A budget in which government spending projections are equal to income.
Budget Deficit
The amount of government spending that has exceeded its income for a certain time period.
Budget Surplus
The rare occasion in which a government’s income exceeds spending for the period.
Central Bank
A country’s primary monetary authority with monopolistic control over the money supply, monetary policy, and member bank regulation.
A decline in general price levels, usually caused by a reduction in the money supply.
A relationship between market price and the amount of a particular good or service that consumers will want to purchase at that price.
Escrow Service
An intermediary that holds and disburses payment only when the recipient has met the agreed upon conditions of the transaction.
Fiat Money
Government issued currency that is not backed by a physical commodity such as gold.
Financial Intermediaries
Banks and other financial institutions that accept deposits from savers and use those deposits to make loans to borrowers.
Fractional Reserve Banking
A banking system in which only a fraction of customer deposits managed by the bank are actually backed by cash on hand and available for withdrawal.
An increase in general price levels over some defined time period often caused by a increase in the supply of money.
A legally binding obligation to repay a debt.
A place, such as the stock market, where buyers and sellers make exchange of value transactions.
Market Capitalization
Commonly referred to as market cap, the total value of a currency or asset. Market cap can be calculated by multiplying the total number of outstanding shares (or coins) by the value (or price) per share. You can view the market cap of any tradeable cryptocurrency at
Market Order
An order placed on an exchange to buy or sell an asset at market price (lowest sell price if you are buying or highest buy price if you are selling). Orders are filled immediately.
Pump and Dump
A form of securities fraud in which misleading information is released in order to inflate the value of a particular investment. The perpetrators then ‘dump’ their overvalued holding on new investors.
The amount of a particular good or service that is available for sale.The amount of a particular good or service that is available for sale.
A compulsory contribution to state revenue, taken by the government from worker and business income, or through additional costs on goods, services, and transactions.