Budgeting
Paying Yourself First
The first “bill” you pay every month is to your savings account. Transfer a pre-determined amount into savings at the beginning of the month.
Goals
Aims or desires we hope to achieve in life
Deductions Definition
The action of taking away (money).
Tip
Money or gift given to a person for performing a service.
Simple Interest
Interest charge that borrowers pay lenders for a loan.
50/20/30 Budget
50% of your net income should go to your needs, 20% should go to savings, and 30% should go to your wants.
Benefit
Whatever favorable outcomes we get when we make a choice (positive)
State Income Tax
A direct tax imposed by a state on income earned in or from the state.
Commision
A set fee or percentage of a sale paid to a salesperson.
Compound Interest
Interest earned on the principal and on the previously earned interest.
Zero-Based Budget
Every single dollar of your income is assigned to a specific expense, leaving you with a balance of $0.
Gross Pay
What employees earn before deductions.
401(k) Withdrawals
If you withdraw from your 401(k) before you retire, you get taxed and penalized.
Wage
Employees who work for wages are paid for each hour worked.
The Rule of 72
A simplified formula for compound interest that calculates how long it'll take for an investment to double in value.
Envelope Budget
You put specific amounts of your money into envelopes (physically with cash, or electronically with an app or spreadsheet) representing different budget categories.
Fixed/Variable Expenses
Fixed: do not vary month to month (rent)
Variable: vary month to month (food)
Federal Insurance Contribution Act
Payroll tax to fund retirement programs.
Salary
Pay expressed annually or monthly.
Simple Interest Calculations
Interest=Principal × Rate × Time
SMART Goals
Specific: Clear and detailed.
Measurable: Quantifiable.
Attainable: Realistic.
Relevant: Meets a real need.
Timebound: Has a deadline and a reasonable time frame.
Opportunity Cost
The next best alternative a person gives up in making a choice/What is lost by choosing one option instead of another
Federal Tax Income
A progressive tax on an employee’s income imposed by the federal government.
Overtime Pay
For employees paid by the hour that works more than 40 hours a week (1.5 times the regular pay)
Compound Interest Calculations
A=P(1+r)^t