Investing
What is investing?
Using money to buy assets like stocks or bonds that can grow in value over time
What is an impulse purchase?
A spontaneous or unplanned purchase is made without considering its necessity
What is the purpose of an emergency fund?
To cover unexpected expenses like medical bills or car repairs.
What is the first step in creating a budget?
Understanding your income and expenses
What is credit?
The ability to borrow money with the promise to repay it later
What does it mean to "buy low and sell high"?
Buying investments when prices are low and selling them when prices are high to make a profit
Name one strategy to avoid overspending.
Create a shopping list and stick to it or use cash instead of credit cards
How does compound interest benefit your savings?
It allows your money to grow over time by earning interest on both the principal and previous interest
What is the 50/30/20 rule?
A budgeting method that allocates 50% for needs, 30% for wants, and 20% for savings.
How does interest affect the cost of borrowing money?
It increases the total amount you have to repay
What is a stock?
A share of ownership in a company
What is the difference between fixed expenses and variable expenses?
Fixed expenses stay the same monthly (e.g., rent), while variable expenses change (e.g., groceries)
Why is an interest rate important when choosing a savings account?
Higher interest rates help your savings grow faster over time
Why is it important to adjust your budget over time?
To account for changes in income or expenses
What is one way to avoid falling into debt?
Spend less than you earn and avoid unnecessary borrowing
What does it mean to “diversify” your investments?
To put your money in different places to reduce risk
What percentage of income does the 50/30/20 rule allocate for "wants"?
30%
What percentage does the 50/30/20 rule recommend saving?
20%
What is the purpose of budgeting?
To plan and manage how you spend and save your money effectively
Why does credit matter?
Credit helps you build a credit history, which is important for things like getting a loan for a car or a house in the future
What is a bond?
Bonds are like loans you give to a company or government. In return, they promise to pay you back with interest
What is the difference between a "want" and a "need"?
A need is something essential for living, like food or housing; a want is something extra, like a new phone.
What is the difference between saving and investing?
Saving is setting aside money for short-term goals, while investing is using money to grow wealth over time
How can tracking expenses help improve your budget?
It shows where your money is going, helping identify areas to cut back.
A credit score is a number that shows how likely you are to repay borrowed money