Budgeting Basics
What is the recommended percentage of your income to allocate for savings according to the 50/30/20 rule?
20%
To cover unexpected expenses
What is the primary purpose of an emergency fund?
Balance
What is the term for the amount of money you owe on a loan or credit card?
Payment history
What factor has the largest impact on your credit score?
Diversification
What is the term for spreading your investments across different asset types to reduce risk?
Tracking your income and expenses
What is the first step in creating a budget?
It ensures consistent saving habits
What is the benefit of automating your savings?
APR (Annual Percentage Rate)
What is the term for the interest rate charged on a credit card balance?
650-750 credit score
What is considered a good credit score range?
Compound interest
What is the term for earning interest on both your initial investment and the interest it has already earned?
Fixed expenses
What is the term for expenses that remain the same each month, such as rent or a car payment?
3-6 months
What is the recommended number of months' worth of expenses to save in an emergency fund?
Debt snowball
What is the term for paying off the smallest debt first to build momentum?
Once a year, but now once a week
How often can you check your credit report for free from each of the three major credit bureaus?
Market risk
What is the term for the risk of losing money due to fluctuations in the market?
Variable expenses
What is the term for expenses that vary each month, such as groceries or utility bills?
It tracks expenses and helps identify areas to save
What is the advantage of using a budgeting app for saving?
Debt consolidation
What is the term for combining multiple debts into a single loan with a lower interest rate?
30%
What is the recommended credit utilization ratio to maintain a good credit score?
To grow wealth over time
What is the primary goal of investing?
Disposable income
What is the term for money left over after all expenses are paid?
It offers higher interest rates than regular savings accounts
What is the benefit of a high-yield savings account?
The percentage of your income used to pay off debt
What is the debt-to-income (DTI)ratio?
What is the delinquency timeline?
The day after the due date, you are considered late and will be charged a late fee (for virtually all creditors, but some may have a grace period).
30 days late, the account is considered delinquent and will be reported on your credit report. 60 days late, the credit line is suspended. after 3 months, it is sent to collection agencies.
Risk tolerance
What is the term for the amount of risk an investor is willing to take?