income
Define income in budgeting
.
Money earned or received from work or other sources
Define a financial need.
Something necessary for survival or basic living.
Define a fixed expense.
A cost that stays the same each month.
In the 50/30/20 rule, what does 50% represent?
Needs
Define a trade-off in budgeting.
Giving up one option to gain another.
Explain what it means for income to be scarce.
Income is limited so choices must be made on how to spend or save it.
Define a financial want
Something desired but not necessary
Define a variable expense
A cost that changes month to month.
If income is $1,000, how much should go toward needs
$500
You have $40 and choose eating out instead of saving for gas. What is the trade-off?
Spending on food instead of saving for transportation
You earn $120 per week and spend $100 on entertainment. What budgeting problem does this show
Poor allocation of limited income or overspending on wants
Classify rent and streaming subscriptions as needs or wants.
Rent is a need; streaming subscriptions are wants.
Classify car payment and groceries.
Car payment is fixed; groceries are variable.
If income is $800, how much should go toward wants (30%)?
$240
You spend all income on entertainment and cannot pay bills. What mistake occurred?
Not prioritizing needs or poor budgeting decisions.
You earn $200 and have $120 in expenses. How much income remains to allocate?
$80
You have $50 and must choose between school supplies or trendy shoes. What should you prioritize?
School supplies because needs come before wants
Why should fixed expenses be planned first when budgeting?
Because they are required and predictable payments
If income is $600, how much should go toward savings (20%)?
$120
Saving for a laptop instead of buying clothes weekly shows what concept?
Opportunity cost and prioritizing long-term goals.
Why must income be allocated when budget Because income is limited and must cover expenses, savings, and priorities.
Because income is limited and must cover expenses, savings, and priorities.
How can confusing wants with needs damage a budget?
It causes overspending and leaves not enough money for essentials.
Your fixed expenses are $600 and income is $800. What amount is left for variable costs and savings?
$200
Why is the 50/30/20 rule helpful for budgeting?
It balances spending and saving to promote financial stability.
With limited income, should you pay rent or buy concert tickets first and why?
Pay rent because needs must be prioritized over wants.