Principal

Principal means the original amount of money borrowed, invested, or saved before interest is added. In simple terms, principal is the starting amount of money. Principal is important because interest is often calculated based on it. For borrowers, the principal is the amount they need to repay before counting interest. For investors or savers, the principal is the original money that can grow over time. For example, if you borrow $10,000 from a bank, the principal is $10,000. Interest is the extra amount you pay on top of that. Principal is not the same as interest. Principal is the original amount, while interest is the extra money paid or earned over time.