Definition
Principal
The original amount of money borrowed or invested, before interest.
This term appears in The Budget Ledger's practical finance glossary.
Principal is the base amount: the sum you borrowed on a loan, or the money you first put into an investment. Interest is calculated on top of it.
On a loan, extra payments that go toward principal shrink the balance that interest is charged on, which is why paying extra early saves so much over the life of the loan.