Budgeting Basics
Why is it important to establish a budget?
To track income and expenses
What is the difference between wants and needs in budgeting?
Needs are essential for survival; wants are desires
What is a common feature of certificates of deposit (CDs)?
Fixed interest rates
What are stocks?
Ownership shares in a company
What is net worth?
Total assets minus liabilities
What should come first in a budget?
Basic needs like food and shelter
What is an example of a need?
Medicine
What is the purpose of certificates of deposit (CDs) in retirement planning?
Long-term investment option
What are bonds?
Loans to governments or corporations
What is bankruptcy?
A legal process for dealing with overwhelming debt
What’s the first step in creating a budget?
Listing your income and expenses
What is an example of a want?
Video game console
What is the primary benefit of a money market account?
High liquidity
What is a mutual fund?
Pooled investments managed by professionals
What is the primary goal of retirement planning?
Building a savings portfolio for retirement
Why do people review their budgets regularly?
To update income and spending habits
Why is it important to know the difference between wants and needs?
To manage money wisely and avoid debt
How does a money market account differ from a savings account?
Money market accounts offer higher interest rates
How do mutual funds help in diversifying investment portfolios?
By pooling money from multiple investors to invest in various assets
What is the main risk of investing in stocks?
You might lose all your money if the company does poorly
What financial choice can hurt your future savings the most?
Overspending and building up debt
How can good financial decisions lead to long-term security?
They help you save, invest, and prepare for the future
Why is compound interest helpful for retirement planning?
It helps money grow faster over time
What is the role of bonds in a diversified investment portfolio?
They add safety and steady returns
What is a reason someone might choose mutual funds over individual stocks?
They want less risk and professional management