Budget Basics
This is a plan for how you will spend your money.
What is a budget?
Rent or a car payment that stays the same each month is this type of expense.
What is a fixed expense?
Money received from working, investing, or other sources is called this.
What is income?
A budget doesn't tell you not to spend. A budget actually ________.
Gives you freedom to spend.
When creating your monthly budget, this comes before deciding where your money will go.
What is listing your income?
In this type of budget, income minus expenses equals zero.
What is a zero-based budget?
Groceries and gasoline are examples of this type of expense because the amount can change.
What is a variable expense?
Your total earnings before taxes and other deductions.
What is gross income?
The envelope system is especially helpful for expenses like ________.
Food, gas, entertainment, and shopping.
This budgeting system involves placing money into separate categories and stopping spending when a category runs out.
What is the envelope system?
A zero-based budget gives every dollar you earn one of these.
What is a job/purpose?
Entertainment, eating out, and unnecessary shopping commonly fall into this category.
What are discretionary expenses?
The amount of money you actually take home after taxes and withholdings.
What is net income?
Specific budget categories help you ________.
Break down your income and spending.
A student earns $1,000 this month and budgets all $1,000 among giving, saving, bills, food, gas, and entertainment. This is an example of this budgeting method.
What is a zero-based budget?
These are the three main priorities in your budget after listing your income.
What are giving, saving, and spending?
An expense that doesn't happen every month but should still be planned for, such as vehicle registration, is this.
What is an intermittent expense?
Money earned based on a percentage of your total sales.
What is commission?
Tracking your expenses helps you understand ________.
Where your money is going / your spending habits.
Your gross income is $3,200, but after taxes and withholdings your paycheck totals $2,650. The $2,650 represents this.
What is net income?
Explain why a zero-based budget does not mean you have zero dollars in your bank account.
Every dollar of income has been assigned to a category or purpose, so income minus planned expenses equals zero.
Your rent is $1,400, groceries are $450, and a concert ticket is $100. Identify each expense type.
Rent = fixed; groceries = variable; concert ticket = discretionary.
Someone whose income changes significantly from month to month should budget using this type of income strategy.
What is irregular income?
When budgeting with irregular income, expenses should be prioritized from ________ to ________.
Most important to least important.
A person has $2,500 of net income and budgets $2,350. To make this a true zero-based budget, what must happen to the remaining $150?
The $150 must be assigned to a budget category, such as saving, giving, debt repayment, or another planned expense.