Budgeting Basics
Fixed expenses
What is the term for expenses that remain the same each month, such as rent or a car payment?
It tracks expenses and helps identify areas to save
What is the advantage of using a budgeting app for saving?
APR (Annual Percentage Rate)
What is the term for the interest rate charged on a credit card balance?
Payment history
What factor has the largest impact on your credit score?
Risk tolerance
What is the term for the amount of risk an investor is willing to take?
Variable expenses
What is the term for expenses that vary each month, such as groceries or utility bills?
It offers higher interest rates than regular savings accounts
What is the benefit of a high-yield savings account?
Balance
What is the term for the amount of money you owe on a loan or credit card?
Once a year, but now once a week
How often can you check your credit report for free from each of the three major credit bureaus?
Diversification
What is the term for spreading your investments across different asset types to reduce risk?
Disposable income
What is the term for money left over after all expenses are paid?
3-6 months
What is the recommended number of months' worth of expenses to save in an emergency fund?
Debt snowball
What is the term for paying off the smallest debt first to build momentum?
30%
What is the recommended credit utilization ratio to maintain a good credit score?
Market risk
What is the term for the risk of losing money due to fluctuations in the market?
Tracking your income and expenses
What is the first step in creating a budget?
To cover unexpected expenses
What is the primary purpose of an emergency fund?
Debt consolidation
What is the term for combining multiple debts into a single loan with a lower interest rate?
650-750 credit score
What is considered a good credit score range?
Compound interest
What is the term for earning interest on both your initial investment and the interest it has already earned?
20%
What is the recommended percentage of your income to allocate for savings according to the 50/30/20 rule?
It ensures consistent saving habits
What is the benefit of automating your savings?
The percentage of your income used to pay off debt
What is the debt-to-income (DTI)ratio?
Debt-to-income ratio
What is the term for the percentage of your income used to pay off debt?
To grow wealth over time
What is the primary goal of investing?