Debt

Topic

Financial Literacy

Definition

Debt is an obligation that requires one party to pay money or other agreed-upon value to another party.

Description

Debt is a common financial tool used by individuals and businesses to finance purchases and investments. It involves borrowing money with the promise of repayment, often with interest. Understanding debt is crucial for managing personal and business finances, as excessive debt can lead to financial instability. In real-world applications, debt is used for buying homes, funding education, and expanding businesses. In math education, debt introduces students to interest calculations, budgeting, and financial planning. A teacher might say, "Debt is like borrowing money that you have to pay back later, often with extra money called interest."

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