Budgeting Basics
what is the 50/30/20 rule?
where 50% of income goes to needs, 30% goes to wants, and 20% goes to savings.
what does "paying yourself first" mean?
the strategy of setting aside a portion of income for savings as soon as you receive it.
what type of investment is a share of ownership in a company?
a stock.
what is a good credit score range?
from 670-739
What is the IRS form that employers send to employees showing annual income and taxes withheld?
a W-2 form.
whats the difference between a need and a want?
need is something essential for survival, a want is something not essential but desired.
what is compound interest?
the interest you earn on both the money you save, and the interest that money earns.
what investment type pools money from many investors to purchase a diversified portfolio of stocks and bonds?
a mutual fund.
what are the 3 major credit bureaus in the united states?
what is the name of the tax credit that lowers the amount of tax owed and may result in a refund?
earned income tax credit.(EITC)
what is an emergency fund?
money saved for unexpected expenses.
how much money should you have in an emergency fund?
about 3 to 6 months' worth of living expenses.
what is the name of an investment that represents a loan to a company or government and pays investors interest?
what is the term for the maximum amount of credit you can use on a credit card?
credit limit.
What form would an independent contractor receive instead of a w-2 form for their tax return?
a 1099 form.
how often should you review and adjust your budget?
at least monthly, or anytime there's a major change in income or expenses
what is the name of the u.s retirement savings account that offers tax advantages?
indivisual retirement account(IRA)
what kind of investment is considered safer then stocks and can be issued by corporations or municipalities?
a money market fund.
what factor has the greatest impact on credit score?
payment history.
what term describes the process of reducing taxable income through various deductions and expenses?
tax deduction.
what is a fixed expense?
a cost that does not change from month to month.
why should you compare prices before purchasing?
to ensure you get the best deal, and save money.
type of investment specifically designed to protect against inflation
a treasury inflation protected security investment.(TIPS)
how often are you entitled to a free credit report, from one of the 3 credit bureaus?
once per year.
when is the deadline for filling individual tax returns with the IRS, in most years?
april 15th.