Budgeting Basics
What is the term for a plan that helps you track your income and expenses?
Budget
What is a credit score used for?
measure your creditworthiness
What is a savings account?
a bank account that earns interest on your money
What is the stock market?
a place where people buy and sell shares of companies
If you earn $500 a month and spend $450, how much are you saving?
$50
What happens if you only pay the minimum on your credit card?
you pay more interest and stay in debt longer
What is the name of the machine you use to withdraw cash?
ATM
What is a retirement account like a 401(k) or IRA used for?
saving money for retirement
Name one fixed expense and one variable expense.
rent (fixed) and groceries (variable)
What is the term for the cost of borrowing money?
Interest
What does FDIC stand for and why is it important?
Federal Deposit Insurance Corporation, it protects your money in the bank
What does “diversifying your investments” mean?
spreading your money across different types of investments to reduce risk
What percentage of your income should ideally go to savings?
20%
Name one way to build good credit.
Pay bills on time
What is compound interest?
interest earned on both the money you save and the interest it earns
What is a mutual fund?
a pool of money from many investors used to buy a variety of stocks or bonds
What is the 50/30/20 rule in budgeting?
50% needs, 30% wants, 20% savings
What is the difference between a credit card and a debit card?
a credit card borrows money, a debit card uses your own money
What is the difference between a checking and a savings account?
checking is for daily use, savings is for storing money and earning interest
What is the difference between a stock and a bond?
a stock is ownership in a company, a bond is a loan to a company or government