Budgeting Basics
What is a budget?
A plan for how to spend and save your money
What’s one reason you might save money?
buying something big (car), emergencies, future goals, mission, etc
What’s one way to avoid overspending?
make a list, set a budget, avoid impulse buys, never grocery shop on an empty stomach
What’s the main purpose of a checking account?
To hold money for everyday spending
What does it mean to invest money?
Using money to buy something (e.g., stocks) hoping it grows in value.
Name two common expenses you might include in a budget?
entertainment, clothes, phone bill, school supplies, food, savings
What’s the safest place to keep your savings?
A bank or credit union savings account
What’s one question to ask yourself before buying something?
Do I need it? Can I afford it? Will I use it?
What’s the difference between a savings account and a checking account?
Savings is for storing money and earning interest; checking is for daily transactions, usually doesn't earn interest
Name one thing people might invest in?
stocks, bonds, mutual funds, real estate, businesses
What’s the difference between a need and a want in budgeting?
A need is something essential (e.g., food, school supplies); a want is something non-essential (e.g., video games, trendy clothes)
What does “interest” mean when you save money in a bank?
Money the bank pays you for keeping your money in an account
What is the difference between a debit card and a credit card?
A debit card is a card linked to your bank account for spending your own money (directly withdrawn from bank). A credit card you pay for later
What’s an ATM, and what can you do with it?
An Automated Teller Machine; you can withdraw cash, check balances, or deposit money.
What’s one benefit of investing money over time?
Your money can grow, often faster than in a savings account
Name one app to keep track of your budget?
Copilot, everydollar, goodbudget, pocketguard, YNAB, etc
What is an emergency fund and how much should you put in there?
A fund in case of emergencies. $1000
What is a danger of using a credit card without a plan?
You could overspend and owe money with interest, leading further into debt.
What’s one fee a bank might charge, and how can you avoid it?
EX: overdraft fee; avoid by not spending more than you have
What’s a risk of investing?
You could lose some or all of your money if the investment value drops
What is the 50/30/20 Rule in budgeting?
50% needs, 30% wants, 20% savings. We really should allocate ours more like 50% needs, 25% wants, 15% Savings, 10% tithing
Where should you actually put your emergency fund/long term savings?
High Yield Savings Account- banks/credit unions pay nothing whereas HYSA's pay around 4% right now. Its accessible but earns better returns
How much is your phone bill each month?
Do you have any idea? It is expensive! On a family plan you could still be $20-50 /mth a line
What is the minimum age to open a bank account?
Depends on the bank but can do it at a minimum of 8 years old with a parents help. It is 18 years old without a parent
What’s compound interest, and why is it powerful for young investors?
Interest earned on both the initial amount and prior interest; it grows faster over time, especially if you start young