Budgeting
This is a plan for where your money comes from and where it goes each month.
What is a budget?
Rent, groceries, and transportation to work are examples of this category.
What are needs?
This type of account is generally used for everyday spending and bills.
What is a checking account?
This is the amount you earn before taxes and other deductions are taken out.
What is gross pay?
You typically fill out this form when starting a new job to tell your employer how much federal income tax to withhold.
What is a W-4?
The basic budgeting formula is Income minus ________.
What are expenses?
Netflix, concert tickets, and eating out are examples of this category.
What are wants?
This type of account is designed for money you're not planning to spend right away and usually earns interest.
What is a savings account?
This is the amount that actually lands in your bank account after deductions.
What is net pay?
This is the process of taking money from each paycheck to help cover your tax bill.
What is Withholding?
If you make $2,000 and spend $1,500, how much do you have left over?
What is $500?
You have $50 left until payday. Your phone bill is due for $40, but you also want to buy a $30 concert t-shirt. Which should you prioritize and why?
What is the phone bill because it is a need, while the concert t-shirt is a want?
This government agency insures eligible bank deposits.
What is the FDIC?
Someone who earns a fixed amount regardless of how many hours they work is generally considered this type of worker.
What is a salaried worker?
This form summarizes your earnings and taxes withheld for the year and is used when filing your tax return.
What is a W-2?
This budgeting rule suggests putting 50% toward needs, 30% toward wants, and 20% toward savings.
What is the 50/30/20 rule?
A basic version of this can be a need, while the newest version can be a want.
What is a phone?
The FDIC generally insures deposits up to this amount per depositor, per insured bank.
What is $250,000?
Someone who earns money based on the number of hours they work is this type of worker.
What is an hourly worker?
A W-2 is generally sent to you around this month each year.
What is January?
You earn $3,000 per month and want to follow the 50/30/20 rule. Your current needs are $1,700. What percentage of your income are your needs, and what does that tell you?
What is 56.7% Your needs are above the 50% guideline, so you may need to examine expenses or adjust how you allocate the rest of your income.
You pay for gym membership because you use it several times a week. Your friends says it's a need because exercise is important. Is the gym membership automatically a need?
No. Exercise may be important, but the specific gym membership is generally an optional exercise. A less expensive alternative can meet the same goal.
Online banks may offer higher interest rates, but one major downside is that they usually don't have these.
What are physical branches?
Student A earns a $45,000 salary. Student B earns $18/hour and works 40 hours a week. Assuming 52 weeks of work, who has the higher annual gross pay?
Student A = $45,000.
Student B = $18 * 40 * 52 = $37,440
Student A earns $7,560 in gross pay.
Your friend says, "I got a big tax refund, so I made more money than I expected." What is wrong with this statement?