50/30/20
This percentage of the 50/30/20 rule is recommended for "needs"
What is 50%?
A balance sheet shows a person's assets, liabilities, and this:
What is net worth/equity?
An income statement primarily shows money coming in and money going out over a period of time. There are 2 categories on the statement that list these.
Social Security and Medicare taxes are commonly grouped together under this acronym.
What is FICA?
This type of account is designed for everyday spending and typically comes with a debit card.
What is a checking account?
Dining out and traveling generally fall into this category
What are "wants"?
Cash, a retirement savings account, and a car's value are examples of this:
What are assets?
Salary, Wages, and interest earned are examples of this.
What is income?
This is the amount of money you earn before taxes and other deductions are taken out.
What is gross pay?
You have $4,000 in your checking account, $8,000 in savings, and $10,000 in credit card debt. You receive a $5,000 bonus. A financially responsible move would be to use the bonus to do this first.
What is pay down the high-interest credit card debt?
A $4,000 monthly take-home income would allocate this amount towards "wants"
What is $1200?
Credit card debt, student loans, and a mortgage are examples of this.
What are liabilities?
On excel, you use this function when calculating total income and total expenses.
What is "sum" function?
You earn $50,000 but your paycheck shows only $38,000 was taxed. This is the amount the federal government uses to calculate your federal income tax.
What is taxable income?
If you only make the minimum payment on a credit card, this is the percentage that tells you how expensive that borrowed money is. (Acronym)
What is APR?
You make $5,000 per month after taxes. You spend $2,700 on needs and $1,000 on wants. How much are you currently putting towards savings/debt?
What is $1,300?
Someone has $80,000 in assets and $50,000 in liabilities. Their net worth is this.
What is $30,000?
A person earns $5,000. Their expenses are $1,500 for housing, $600 for food, $400 for transportation, $300 for entertainment, and $500 for other expenses. Their net income is this.
What is $1,700?
A traditional 401(k) contribution generally reduces your taxable federal income, but it generally does NOT reduce these two FICA taxes.
What are Social Security and Medicare?
You make $60,000 a year and your employer offers a 5% 401(k) match. You contribute 5% of your salary. This is the amount of money your employer contributes to your 401(k) over the year, assuming the match is dollar-for-dollar.
What is $3,000?
Someone earns $6,000 per month and spends $3,500 on needs, $1,500 on wants, and $1,000 on savings/debt. Compared with 50/30/20, their needs are this much ABOVE the recommended amount.
What is $500?
A person buys a $30,000 car with a $25,000 loan an $5,000 cash down. Assuming nothing else changes, their assets increase by $30,000 and their liabilities increase by this amount.
What is $25,000?
Your monthly income statement shows $5,000 of income and $3,500 of expenses. You then transfer $500 from checking into your savings account. This is your net income.
What is $1,500?
You paid $12,000 in taxes over the year, but when doing your return you realized you only owed $10,000. this is what happens with the extra $2,000.
What is a $2,000 tax refund?
This financial strategy means spreading your investments across different assets rather than putting all your money into one.
What is diversification?