Money Basics
What is the definition of income?
Income is the money received, especially on a regular basis, for work or services.
What is a budget?
A budget is a plan that outlines expected income and expenses over a specific period.
What is a short-term financial goal?
A short-term financial goal is a financial target you plan to achieve within a year (e.g., saving for a new phone).
Define an assest.
An asset is anything of value or a resource owned by an individual or business.
What is a need vs. want?
A need is something essential for survival (like food or shelter), while a want is something that is desired but not essential (like a new video game).
Name two common types of income.
Two common types of income are wages (from employment) and investments (such as dividends or interest).
Why is it important to track expenses?
It is important to track expenses to understand spending habits, avoid overspending, and ensure that you stay within your budget
Give an example of an intermediate-term financial goal.
An example of an intermediate-term financial goal is saving for a car, which may take 1-5 years.
What is a liability?
A liability is a financial obligation or debt owed to another party.
Why should you compare prices before making a purchase?
Comparing prices before making a purchase can help ensure you get the best deal and save money.
What is a debit?
A debit is an entry recording an amount owed, often used in the context of a debit card, which directly withdraws money from a checking account.
What is an emergency fund?
An emergency fund is money set aside to cover unexpected expenses or financial emergencies.
What are the benefits of setting financial goals?
The benefits of setting financial goals include providing direction, motivating saving, and helping prioritize spending.
How do you calculate net worth?
Net Worth = Assets - Liabilities
What are some strategies to save money while shopping?
Some strategies to save money while shopping include using coupons, buying in bulk, and waiting for sales.
What does it mean to save money?
Saving money means to set aside a portion of your income for future use rather than spending it all immediately.
How can you reduce your spending?
You can reduce spending by identifying non-essential expenses, using coupons, or finding cheaper alternatives.
How do you determine the cost of a financial goal?
To determine the cost of a financial goal, research the price of the item or service and include any additional expenses (like taxes or fees).
Give an example of a common asset?
An example of a common asset is a car or a home.
How can discounts and sales affect your spending?
Discounts and sales can lower the price of items, allowing you to save money or purchase more with the same budget.
Explain the difference between fixed and variable expenses.
Fixed expenses are costs that do not change month to month (like rent), while variable expenses can fluctuate based on consumption (like groceries).
Describe a method to create a budget?
To create a budget, list all sources of income, categorize expenses, set spending limits for each category, and track your actual spending against the budget.
What is the SMART criteria for setting goals?
The SMART criteria for setting goals stands for Specific, Measurable, Achievable, Relevant, and Time-bound.
Explain why it's important to understand assets and liabilities.
Understanding assets and liabilities is important because it helps determine financial health and informs decision-making for budgeting and investments.
What is impulse buying, and how can you avoid it?
Impulse buying is making unplanned purchases, and you can avoid it by creating a shopping list and sticking to it, as well as setting a waiting period before making a purchase.