Budgeting Basics
List three categories you should include in a monthly budget.
Needs, wants, saving
Expenses, income, savings
Your part-time job pays $12 per hour and you work 15 hours a week. How much do you earn in a week?
$180
Explain why it’s better to start saving early, even if you can only save a small amount.
compound interest
early savings grow faster
The money you receive, either from employment, investments, or other sources
Income
You spend $100/week on groceries but want to reduce it by 15%. How much will you save in a month (4 weeks)?
What is the main purpose of creating a budget?
to track and plan income and expenses
What is an example of an irregular income?
freelance work, side job, bonuses
What is a zero-based budget?
A budget where every dollar of income is assigned a purpose, so income minus expenses equals zero
Costs that stay the same each month, such as rent or a car payment
Fixed Expenses
Your rent is $600, your utilities are $100, and your groceries cost $200. What is your total monthly expense?
$900
Name one tool you can use to create a budget.
Spreadsheet, app, pen and paper
List one strategy to reduce variable expenses without affecting your basic needs.
- cook at home
- limit subscriptions
What is the 50/30/20 Rule?
50 needs, 30 wants, 20 savings
Items that are not necessary for survival but are desired, such as entertainment or luxury goods
Wants
Rent is $700, utilities are $150, groceries are $250. Your monthly income is $1,500. How much money is left for savings and wants?
$400
Explain how inflation can impact your budget over time.
Rising prices mean your fixed income buys less, requiring adjustments to spending and saving plans.
A person earns $15/hour and works 25 hours/week. How much will they earn in a 4-week month?
$1,500
If you set aside $43 per week into a sinking fund for holiday gifts, how much will you have in 14 weeks?
$602
Save part of your paycheck before you do anything else
Pay yourself first
If you spend $50 less on eating out each month, how much would you save in a year?
$600
A teen earns $800 per month and wants to save 25% for a new laptop. How much should they save each month and how long until they can buy a $500 laptop?
$200 per month, they can buy it in 3 months.
What is the difference between gross income and net income?
Gross income is total earnings before taxes; net income is what you take home after taxes
Name three fixed expenses and three variable expenses someone may experience in a month.
Fixed: rent, loan payments, tuition, phone bill
Variable: groceries, gas, clothes, entertainment
Total income before any deductions, like taxes or retirement contributions
Gross income
Your paycheck is $600 every two weeks. Rent = $650/month, utilities = $150/month. How much should you set aside from each paycheck to cover these?
$400