What is the term that describes the availability of money when needed?

The correct term that describes the availability of money when needed is liquidity. Liquidity refers to how easily assets can be converted into cash without significantly affecting their value. It is a crucial concept in personal finance because having liquid assets means that an individual or an organization can meet its immediate financial obligations and expenses without having to sell off long-term investments or incur penalties.

For instance, cash in a checking account is highly liquid since it can be accessed immediately, while investments such as real estate or stocks may take longer to sell and convert into cash. Understanding liquidity helps individuals manage their finances effectively by ensuring they have enough readily available funds to handle emergencies and other short-term needs.

The other terms, though related to finance, do not accurately capture the specific aspect of asset availability. Solvency refers to the ability of an entity to meet its long-term debts, capital signifies wealth in the form of money or assets used to produce goods and services, and equity pertains to ownership interest in assets after liabilities have been deducted. Each of these concepts plays an important role in financial planning but does not refer directly to the ease of accessing cash when necessary.