Budgeting Basics
The first step in creating a budget is identifying these two components of your finances.
What is income and expenses?
This three-digit number represents your creditworthiness.
What is credit score?
What is a loan or debt investment?
This is the date by which federal income tax returns are typically due in the U.S.
What is April 15th?
This types of account typically offers interest and allows easy access to funds for short-term savings.
What is a savings account?
The term for money set aside for emergencies, often equal to 3-6 months of expenses.
What is an emergency fund?
A credit card allows you to borrow up to this limit, set by the issuer.
What is a credit limit?
This term refers to diversifying investments to reduce risk.
What is diversification?
The form used to report your annual earnings to the IRS is called this.
What is a W-2 form?
This type of savings plan is often used to save for a child's education.
What is a 529 plan?
The difference between your income and expenses is called this.
What is net savings or disposable income?
The percentage charged annually for borrowing money on credit is called this.
What is annual percentage rate (APR).
This popular retirement account allows for tax-free growth and withdrawals after age 59 & 1/2
What is a Roth IRA?
This type of tax is deducted from your paycheck to fund Social Security and Medicare.
What is FICA tax?
When you set up automatic transfers to your savings, it's referred to as this type of savings.
What is "paying yourself first"?
Fixed and variable are two main types of these in a budget.
What are expenses?
Paying only this on your credit card bill can lead to long-term debt.
What is the minimum payment?
What are stocks?
Contributions to traditional IRAs and 401(k)s are examples of this type of deductions.
What are pre-tax contributions?
The interest earned on both the initial deposit and previously earned interest is called this.
What is compound interest?
The value of your budget when income and expenses are equal.
What is zero?
Consolidating debt involves combining multiple debts into this type of loan.
What is a single loan or debt consolidation loan?
The rule of 72 estimates how long it will take for an investment to do this.
What is double in value?
What type of tax system changes if a person pays a higher tax rate on higher levels of income.
What is a progressive tax system?
Saving for retirement is often easier when you contribute to this employer-sponsored plan with matching benefits.
What is a 401(k)?