Basic definitions
An estimate or plan to manage your income and expenses over a set period of time.
What is a budget?
Essential items required for survival, such as basic food, shelter, and water.
What are needs.
A cost that changes from month to month based on your usage or habits, such as groceries or clothing.
What is a variable expense.
You earn $600 a week. Your fixed monthly expenses total $1,500. Assuming there are exactly 4 weeks in a month, this is how much cash you have left over for flexible spending or savings.
What is $900.
When you buy a $15,000 used car, the true cost is much higher because you must also pay a monthly premium for this mandatory legal requirement to drive it.
What is insurance?
The total amount of money you earn before any taxes or deductions are taken out.
What is Gross pay.
Non-essential items that enhance your quality of life but aren’t required to live, like video games or concert tickets.
What are wants.
A cost that stays exactly the same every month, like rent or a subscription service.
What is a fixed expense.
If you accidentally spend more money than you actually have available in your checking account, your bank will hit you with this expensive penalty fee
What is an overdraft fee
Many first-time renters forget that keeping the lights on, the water running, and the internet connected requires paying these separate monthly bills.
What are utilities?
The actual amount of money you take home in your paycheck after taxes and deductions.
What is Net pay.
The common financial problem that happens when you prioritize your discretionary wants over your essential needs, often leading to debt.
What is overspending.
A monthly utility bill like electricity or water is generally classified as this type of expense because the amount fluctuates based on seasonal use
What is a variable expense
You buy a streaming subscription for $15 a month. If you forget to cancel it and keep it for 3 full years, this is the total cumulative amount you will have spent on that single subscription.
What is $544.
While buying a house builds long-term wealth, a major "reality check" for homeowners is that they are entirely responsible for paying out of pocket for these ongoing tasks, like fixing a broken roof or a leaking pipe.
What is home maintenance and repairs.
Money set aside specifically to cover unexpected financial events, like emergency medical bills or car repairs
What is an emergency fund.
A classic non-digital method of organizing cash into physically labeled containers to prevent you from overspending on your "wants".
What is the envelope method.
Name two upfront, fixed expenses you will likely have to pay immediately at the exact time you sign a new apartment lease
What are first months rent and security deposit.
You want to build a $1,200 emergency fund over the next 6 months. This is the exact amount of money you must discipline yourself to save each month to hit your goal.
What is $200.
When budgeting for a vacation, travelers are often hit with this specific, mandatory daily fee charged by hotels that isn't included in the initial advertised room price.
What is a resort fee.
A budgeting style where every single dollar of your income is assigned to a specific category, ensuring your income minus expenses equals exactly zero.
What is zero based budgeting.
If you have $50 left at the end of the month and you spend it on a video game but the next week you friend are going to a concert and you don’t have any money left and can’t go. What is the term for what you are experiencing?
What is oppertunity cost.
This is the specific term for a fixed expense that you only pay once or twice a year rather than monthly, such as an annual car registration fee or a bi-annual insurance premium.
A periodic fixed expense.
Your variable grocery budget for the month is $300. If you spend $85 in week one and $95 in week two, this is the exact dollar amount you have left for the rest of the month.
What is $120.
When moving into a new apartment, landlords typically require you to prove your income by showing that your gross monthly pay is at least this many times the cost of the monthly rent
What is 3 times.