Vocab
Budget
A budget that involves allocating every dollar of income to a specific category.
Zero Based Budget.
In the 50/30/20 budget, what percentage of your money is allocated towards wants?
30%
Fixed expenses
The total amount of money made before any deductions come out.
Gross Pay
A budget that involves breaking down expenses into 3 categories: Needs, Wants, Savings
50/30/20 Budget
What is one of the 5 purposes of creating a budget according to what we covered in the notes.
Financial Planning, Expense Tracking, Debt Management, Savings and Investing, Financial Decision Making.
Groceries, shopping, and gas are examples of?
Variable Expenses.
Net Pay
A budgeting strategy that emphasizes saving and investing as the first priority.
Pay Yourself First Budget.
Food, Water, Shelter are examples of?
Why is it important to know your net pay?
Costs that are regular and predictable.
Fixed expenses
A budgeting strategy that involves using physical envelopes to allocate cash for expenses.
Envelope Budget
What is one con of the Envelope Budget?
May not be suitable for online or card based transactions
Requires discipline to stick to a cash only approach.
Retirement, taxes, savings are examples of deductions that are made from your _____
Gross Pay
Costs that fluctuate month to month and are often discretionary.
Variable Expenses.
Budgeting strategy where you allocate a certain percentage of your income to certain categories based on your financial goals and priorities
Percentage Based Budget
What are the 3 steps in the pay yourself first budget?
Set Savings Goals, Automate Savings, Budget Remaining Income.
What are the 4 categories of wants listed in the notes?
Entertainment, Luxury Items, Travel, Hobbies and recreation