Saving & Budgeting
What is the main purpose of a budget?
To track and plan how money is spent and saved
What is a stock?
Ownership in a company
What is a credit card?
Borrowed money that must be paid back
What is income?
Money earned from work
What is the safest place to store money?
A bank
What is an emergency fund used for?
Unexpected expenses like medical bills or repairs
What does it mean when a stock increases in value?
The company is worth more or demand increased
What is interest?
Extra money paid for borrowing money
What are taxes?
Money paid to the government
What investment is considered safest long-term?
Index funds
What percentage of income is commonly recommended to save?
Around 10–20%
What is profit made from selling a stock called?
Capital gain
What happens if you don’t pay credit card debt?
Interest increases and credit score drops
What is gross income?
Income before taxes
Why is saving early important?
More time for money to grow
What is the difference between a fixed expense and variable expense?
Fixed stays the same (rent), variable changes (food, entertainment)
What is diversification?
Investing in multiple assets to reduce risk
What is a credit score?
A number that shows how reliable you are with debt
What is net income?
Income after taxes
What is inflation?
Increase in prices over time
If you earn $3,000/month and follow the 50/30/20 rule, how much should go to savings?
$600. 50% for needs 30% for wants and 20% for savings or debt repayment
If you buy 10 shares at $50 each and sell at $80 each, what is your total profit?
Profit per share = $30
10 × $30 = $300
Why is paying only the minimum payment on credit cards dangerous?
Interest keeps growing, increasing total debt
If you earn $5,000 and pay 20% tax, how much is your net income?
$4,000
Why does inflation make saving money in cash risky long-term?
Because money loses purchasing power over time