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Education
Updated July 11, 2025
Principal
A principal leads and manages a school, ensuring it runs smoothly. They support teachers, guide students, and handle daily operations.
Category
Education
Use Case
Serves as the administrative head of a school or educational institution.
Key Features
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School Leadership & Management
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Academic Performance Oversight
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Student Behavior Guidance
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Staff Supervision & Evaluation
In Simple Terms
What it is
The principal is the original amount of money you start with, whether you’re saving, investing, or borrowing. Think of it like planting a seed—the principal is the seed itself, and anything that grows from it (like interest or profits) depends on how you nurture it.
Why people use it
Understanding principal helps you make smarter money decisions. If you’re saving, it’s the foundation for growth. If you’re borrowing, it’s what you owe before interest piles up. Knowing your principal keeps you in control of your finances.
Basic examples
Saving money: If you put $1,000 in a savings account, that’s your principal. Over time, the bank pays you interest, but your initial $1,000 stays the core amount.
Investing: Buying a stock for $500 means your principal is $500. If the stock grows to $600, your profit comes from that original $500.
Loans: Borrowing $10,000 for a car means your principal is $10,000. The interest is extra, but paying down the principal reduces what you owe.
The principal is the original amount of money you start with, whether you’re saving, investing, or borrowing. Think of it like planting a seed—the principal is the seed itself, and anything that grows from it (like interest or profits) depends on how you nurture it.
Why people use it
Understanding principal helps you make smarter money decisions. If you’re saving, it’s the foundation for growth. If you’re borrowing, it’s what you owe before interest piles up. Knowing your principal keeps you in control of your finances.
Basic examples
Technical Details
What It Is
The principal refers to the original sum of money invested, borrowed, or loaned, excluding any interest, dividends, or earnings accrued over time. It is a foundational concept in finance and lending, categorized under capital or debt management. The principal remains constant unless altered by repayments, additional investments, or withdrawals.
How It Works
The principal operates as the baseline amount in financial transactions, determining the scale of interest calculations or investment returns. In lending, interest is computed as a percentage of the principal, while in investing, returns are often measured against it. The principal is typically managed through financial instruments like loans, bonds, or savings accounts, where its growth or depletion depends on terms like interest rates, repayment schedules, or market performance.