Saving & Budgeting
This rule of thumb says you should have 3–6 months of living expenses set aside in case of emergencies.
What is an emergency fund?
This type of investment represents ownership in a company.
What are stocks?
This term describes the tendency to spend more as your income increases.
What is lifestyle inflation?
This term refers to the general level of prices for goods/services rising, which decreases your purchasing power.
What is Inflation?
This is a type of tax advantage retirement account for federal employees and members of the uniformed services.
What is Thrift Savings Program?
This type of savings account usually offers higher interest than a traditional bank savings account.
What is a high-yield savings account OR money market fund?
This type of investment is considered a loan you make to a company or government.
What are bonds?
This happens when people receive their pay and use all of it until they receive their next pay check and continue this cycle.
What is living pay check to pay check?
This type of interest is interest earned on both the initial principal and the accumulated interest from previous period.
What is compound interest?
What are the two options of TSP accounts?
What are the Roth and Traditional options?
A way to automatically send money from your check to another account.
What is setting up an allotment or automatic transfers.
This investing strategy involves spreading money across different asset classes to reduce risk.
What is diversification?
A strong motivator in behavioral finance, this emotion often causes people to sell investments when markets dip.
What is fear (or panic)?
This strategy involves making payments toward the loan with the highest interest rate first, saving money in the long run.
What is the avalanche method of debt repayment?
This is the most the government will match your TSP contributions if you are enrolled in the Blended Retirement System
What is 5%?
This type of account is lets you set aside pretax money for medical costs ("triple tax-free").
What is a Health Savings Account (HSA)?
This fund is actively managed, has higher fees, and aims to outperform the index.
According to research, most millionaires live below their means and practice this spending habit.
What is frugality?
This strategy involves making payments toward the loan with the lowest interest rate first, building momentum and sense of accomplishment.
What is the snowball method?
This is the age you can withdraw from your TSP without paying a early withdrawal penaly tax of 10%.
What is 59.5 years old?
This budgeting strategy allocates 50% of income to needs, 30% to wants, and 20% to savings/debt repayment.
What is the 50/30/20 rule?
This is a diverse mix of funds that automatically adjust their asset allocation over time to be more conservative as it gets closer to the target date (aka retirement date).
What is a Lifecycle fund or Target Date fund?
This common cognitive bias leads investors to believe past winners will continue to perform well in the future.
What is recency bias?
The state of having enough income from assets to cover living expenses without needing to rely on active employment.
What is being financially independent?
This retirement system provides a government match to your contributions while this other system has a larger pension with no TSP match.
What is the Blended Retirement System and Legacy High-3 system.