BUDGETING BASICS
The guideline that suggests dedicating 50% of your net income to needs, 30% to wants, and 20% to savings and debt repayment?
What is the 50/30/20 rule?
The three major credit reporting agencies in the United States?
What are Equifax?, Experian? and TransUnion?
The specific amount of time financial experts recommend your emergency fund should cover?
What is 32-6 months of living expenses?
The extra money you earn on a savings or high yield checking account, or the extra money you pay when taking out a loan?
What is interest?
Money taken out of your paycheck before it hits your bank account to pay for government programs?
What are payroll taxes/withholding?
Your monthly expenses are greater than your net income?
What is a budget deficit?
The name of this gauge that lenders use to determine your creditworthiness, generally ranging from 300 to 850?
What is your FICO score?
The measure of household wealth calculated by taking your total assets and subtracting your total liabilities?
What is net worth?
The magical mathematical concept of earning interest on your previously earned interest over time?
What is compound interest?
The document an employer must provide to you by January 31st to prepare your taxes?
What is the W-2 form?
A bill or payment that stays the exact same amount every single month, such as rent or a car payment?
What is a fixed expense?
The best way to avoid paying costly interest on your credit card balance every month?
What is paying your statement balance in full?
This government agency guarantees your money in a bank account up to $250,000.00?
What is the FDIC?
An investing strategy where you put a fixed dollar amount into investments on a regular schedule (e.g., every paycheck), regardless of market highs and lows?
What is dollar-cost averaging?
The amount you must pay out-of-pocket before your insurance kicks in to cover the rest of the claim?
What is the deductible?
Essential item(s) that you need to survive, like housing and groceries, versus non-essential items you'd like to have?
What is the difference between needs and wants?
Paying only this amount on a credit card leads to accumulating more debt?
What is the minimum payment?
The average rate of which money loses its purchasing power over time, eating into cash savings?
What is inflation?
This stands for "Individual Retirement Account", an alternative to an employer-sponsored plan?
What is an IRA?
This type of employer-sponsored retirement account allows your money to grow with potential tax benefits?
What is a 401-K or 402-b?
The most important first step to take before creating a monthly budget?
What is tracking your income and current expenses?
The asset or property offered as security to a lender, which they can take if you default on a loan?
What is collateral?
The concept of spreading your money across various asset types (stocks, bonds, real estate) to reduce risk.
What is diversification?
A small portion of a company's profit paid out regularly to its shareholders?
What is a dividend?
This type of insurance protects your income if you are unexpectedly injured or become ill and cannot work?
What is short-term or long-term disability insurance?