Budget Basics
What is a budget?
A financial plan that tracks income and expenses over a specific period.
If you save 10% of your $1,500 monthly income, how much do you save each month?
$150
What is an emergency fund?
Savings set aside for unexpected expenses or financial emergencies.
What should you do if you regularly exceed your budget in a certain category?
Review and adjust your budget, or find ways to cut back on spending in that category.
If you spend $50 on groceries out of a $500 budget, what percentage of your budget did you spend on groceries?
10%
Name two essential expense categories typically found in a budget.
Housing and groceries.
What is 20% of $200?
$40
Why is it beneficial to automate your savings?
It ensures you save regularly without forgetting or being tempted to spend the money.
Why is tracking your expenses important?
It helps you understand where your money is going and identify areas to cut back or save.
You save $200 from a monthly income of $2,000. What fraction of your income is this?
1/10 or 10%
Why is it important to include a savings category in your budget?
To set aside money for emergencies, future purchases, or investments.
If your grocery budget is 15% of your monthly income of $2,000, how much is your grocery budget?
$300
What is the difference between short-term and long-term savings?
Short-term savings are for goals within a year, while long-term savings are for goals beyond a year.
Name one method to track your expenses.
Using a budgeting app or spreadsheet.
If your income is $2,500 and you spend $1,000 on rent, what percentage of your income is spent on rent?
40%
What does it mean to live within your means?
Spending less or equal to your income, not more.
Your entertainment budget is $100, which is 5% of your monthly income. What is your monthly income?
$2,000
How can compound interest benefit your savings over time?
It allows your savings to grow faster because you earn interest on both the initial principal and the accumulated interest.
What is the 50/30/20 rule in budgeting?
A budgeting rule that allocates 50% of income to needs, 30% to wants, and 20% to savings and debt repayment.
Your monthly income is $3,000, and you spend $450 on groceries. What is the percentage of your income spent on groceries?
15%
What is discretionary spending?
Money spent on non-essential items like entertainment and hobbies.
If you increase your savings from 5% to 10% of a $3,000 monthly income, how much additional money will you be saving each month?
$150
What is a high-yield savings account?
A savings account that offers a higher interest rate than a standard savings account.
How can you manage variable expenses effectively?
By setting aside a specific amount each month for these expenses and adjusting as needed based on spending patterns.
If you want to save 25% of your $4,000 monthly income, how much should you save each month?
$1,000