Budgeting Basics
What is a budget?
A plan for managing your money, including income and expenses.
What is a savings account?
A bank account where you can deposit money and earn interest.
What is a checking account?
A bank account used for daily transactions, such as deposits and withdrawals.
What is credit?
The ability to borrow money with the promise to repay it later.
What is a need?
Something essential for survival, like food or shelter.
What are the two main components of a budget?
Income and expenses.
What is interest?
The money earned on savings or paid on borrowed funds.
What is a debit card?
A card that withdraws money directly from your checking account.
What is a credit score?
A number that represents your creditworthiness.
What is a want?
Something you desire but do not need for survival, like a new phone or a vacation.
What is a fixed expense?
An expense that stays the same each month, like rent or a car payment.
What is a good rule of thumb for saving?
Save at least 20% of your income if possible.
What is an overdraft fee?
A fee charged when you spend more money than you have in your account.
What is the purpose of a credit card?
To make purchases now and pay for them later.
What is impulse buying?
Making a purchase without planning or consideration.
Name a variable expense.
Examples include groceries, utilities, or entertainment.
What is the stock market?
A place where shares of publicly traded companies are bought and sold.
What is a high yield savings account?
type of savings account that offers a higher interest rate than traditional savings accounts
What is interest on a loan?
The cost of borrowing money, expressed as a percentage.
What is comparison shopping?
Comparing prices and quality before making a purchase.
Why is it important to track your spending?
To understand where your money is going and to ensure you stay within your budget.
What is difference between Need and Want?
Needs are items necessary for survival
i.e- food, shelter
Wants are items we desire to possess but are not necessary for survival
i.e- designer clothes and sneakers
What is online banking?
Managing your bank accounts and conducting financial transactions over the internet.
Name one way to improve your credit score.
Examples include paying bills on time, reducing debt, or keeping credit card balances low.
Why is it important to avoid scams?
To protect your money and personal information from fraud.