Budgeting Basics
This rule allocates 50% of income to necessities, 30% to discretionary spending, and 20% to savings and debt repayment
What is the 50 30 20 rule?
In the context of investing, this strategy refers to the practice of keeping investments for the long term, regardless of short-term market fluctuations
What is the buy and hold strategy
This is the maximum credit score you can acheive
850
This economic term describes a prolonged period of economic downturn, marked by a decrease in economic activity, employment, and spending
What is a recession
These are regular, predictable costs in your budget
What are fixed expenses
This strategy involves spreading investments across different asset classes to reduce risk
What is diversification
Responsible credit card use involves paying this amount in full by the due date to avoid interest charges
What is a statement balance
This economic term describes the total value of all goods and services produced in a country within a specific time frame
What is gross domestic product (GDP)
These are costs that change month to month in your budget
What are variable expenses
This investment type pools money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities
What are mutual funds
This term refers to the maximum amount of money you can borrow on your credit card
What is a credit limit
This economic system relies on private ownership of the means of production and individuals making decisions based on self-interest and competition
What is a market economy
Provides financial stability in your budget; recommended size is 3-6 months of living expenses
What is an emergency fund
Stocks represent ownership in a company, while these represent debt securities
What are bonds
This credit card feature allows you to withdraw cash from an ATM but often comes with high fees and interest rates, making it a less favorable option
What is a cash advance
This economic indicator measures the average change over time in the prices paid by consumers for goods and services
What is the consumer price index (CPI)
In budgeting, this term refers to the value of the next best alternative foregone when making financial choices
What is opportunity cost
This measure indicates the volatility of an investment's returns compared to the overall market
What is beta
The general rule of thumb is to keep your credit utilization rate (your balance over your credit limit) under this percentage
What is 30 percent
When the government adjusts tax rates and spending to influence the economy, it is using this economic policy tool
What is fiscal policy?