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Credit
Money you borrow now and agree to pay back later, usually with interest on top.
Example
You borrow $200 from a small lender to buy a bike, agreeing to pay $20 a month for twelve months. You get the bike today. By the end you have paid $240. The extra $40 is the cost of using the lender's money for a year.
How it fits in
Credit lets you spend before you have earned. That helps in a few specific situations, like a sensible mortgage or a business loan that earns more than the interest. It hurts in many others, like running up a credit-card balance to buy things you would not buy with cash. The interest rate is a fast clue. Single-digit rates often serve you. Twenty-plus percent rates almost never do.
Where this is taught
Related terms
When the money you earn from saving starts earning its own money on top.
Interest paid only on the original amount, never on the interest you have already earned.
Needs are the things that keep you safe and well. Wants make life nicer. Mixing them up is what empties most budgets.