Budgeting
What is a budget?
A budget is a plan for how you spend your money.
What is income?
money received for work, as a gift, or through investments
What is a cash-flow statement?
a record that summarizes all of the income and spending over a certain time period
What is a Zero-Based budget?
a cash-flow plan that assigns an expense to every dollar of your income; the goal is for the total income minus the total expenses to equal zero
What is a irregular income?
income that comes in at different amounts or at different times, or both income that comes in at different amounts or at different times, or both
What is the purpose of a budget?
Having control over your money
What is a fixed expense?
expense that remains the same from month to month
How do you track your expenses?
just record how much you spent and subtract it from the budget category. Instantly see how much money is still available in that category.
What is a Net Income?
what a person earns after payroll taxes and other deductions are taken out
What is a commission?
earnings based on a percentage of the sales made
Why does budgeting provide freedom?
it gives you freedom to spend money on what you want.
What is a variable expense?
expense that varies in dollar amount from month to month but that you can expect to have every month
What is the envelope system?
use cash for categories you tend to overspend on
What is a Gross Income?
the amount you earn before taxes and other payroll deductions
How do you budget with an irregular income?
average your income over several months. Prioritize essential expenses first, build an emergency fund, and create a system for handling extra income when it arrives.
How do you create a budget?
Know your monthly income, then list and categorize your expenses. Set clear financial goals, track your spending to see where your money goes, then adjust your budget to align with those goals and your income.
What is a intermittent expense?
expense that occurs at various times throughout the year and tends to be in large, lump sums
How do you use a cash-flow statement?
summarizes all of your income and expenses over a certain time period. A cash-flow statement shows you what has already happened with your money.
What are the Five Foundations?
1. Save a $500 emergency fund
2. Get out and stay out of dept
3. Pay cash for your car
3.Pay cash for college
5. Build wealth and give
How do you make time for a budget?
schedule time every month to work on the next month’s budget.
Out of how many Americans actually budget?
35% of Americans actually budget, 95% say its important
What is a discretionary expense?
expense for things you don’t need
What if you go over?
Unless you work overtime or bring in some extra income, you’ll need to adjust your budget for the month. That means you’ll have to cut back on how much you planned for one category to balance out what you overspent in another.
How do you create a zero- based budget?
calculate your total monthly income and then list every planned expense, including savings and debt payments, assigning a job to each dollar until your total expenses equal your total income, resulting in zero
What's the difference between a spender and a saver?
A spender prioritizes present enjoyment, often leading to impulse purchases and potentially debt, while a saver prioritizes future security and enjoys watching their money grow, often exhibiting a natural fear of parting with cash and a preference for financial stability.