Budgeting Basics
This financial tool helps track income and expenses, often used to create a monthly plan for spending.
Budget
Lifestyle characterized by running out of money until getting paid next.
Living paycheck-to-paycheck
This number is used by lenders to assess your ability to repay loans and ranges from 300 to 850.
Credit Score
This type of tax is applied when you make a purchase, and the rate varies by state or municipality.
Sales Tax
Experts recommend having this many months' worth of expenses saved in an emergency fund.
3-6 months
This term refers to money set aside for unforeseen expenses, like car repairs or medical bills.
Emergency Funds
This type of account earns interest and is a safe place to store money but may have lower returns.
Savings Account
This is the cost of borrowing money, expressed as a percentage of the loan amount.
Interest Rate
Tax withheld from your paycheck.
Income Tax
This type of insurance provides coverage for medical expenses.
Health Insurance
This term describes the percentage of income that should go toward savings, ideally at least 20%.
50/30/20 rule
- 50% of income on needs
- 30% of income on wants
- 20% of income on savings
This is the process of spreading investments across different types of assets to reduce risk.
Diversification
This type of debt accrues interest quickly and is often the most expensive to carry month-to-month.
Credit Card Debt
Threshold for which dollars are taxed at a higher rate.
Tax Bracket
This insurance type covers damages to your car in case of an accident.
Car Insurance
This percentage is commonly recommended for housing costs in relation to your monthly income.
(I.e. What percentage of your income should be spent on housing?)
30%
This type of investment represents partial ownership in a company and can rise or fall in value.
Stock
Paying more than the minimum balance on this type of loan can help you reduce interest and pay it off faster. This type of loan is popular for students in undergrad, graduate, PhD, etc.
Student Loan
This form shows how much you've earned and how much has been withheld for taxes by your employer.
W-2
This term refers to the amount of money you must pay out of pocket before insurance kicks in.
Deductible
This term describes the difference between your income and expenses.
Net Income
This retirement savings account offers tax benefits but limits how much you can contribute each year.
IRA or 401(k)
This term refers to a loan used to buy a home, which is repaid over a set period, often 15-30 years.
Mortgage
This term describes a reduction in taxable income based on certain expenses, like mortgage interest or student loan interest.
Tax Deduction
This type of fund is specifically set aside to cover unexpected job loss or reduction in income.
Unemployment fund