Income and Expenses
This is the money you receive, typically from work, investments, or other sources, which can be used to cover expenses, save, or invest
Income
Net worth is calculated by subtracting this from your assets.
Liabilities
When you put money into a savings account, you earn this, usually calculated as a percentage of the balance
What is interest?
This budgeting model allocates 50% of income to needs, 30% to wants, and 20% to this
What is savings or debt repayment?
You earn $2,500 per month and allocate $1,250 to needs, $750 to wants, and the rest to savings. How much do you save
What is $500?
This type of expenses fluctuates according to changes in lifestyle, such as food and entertainment costs
Variable
This financial document shows an individual's financial position by listing assets and subtracting liabilities
What is a net worth statement?
This type of account typically offers a higher interest rate than a regular savings account but may require a higher balance
What is a high yield savings account?
This financial practice involves creating a plan for managing income and expenses, ensuring that money is allocated for necessary costs, savings, and financial goals
What is budgeting?
A budget allocates $1,000 for needs, $800 for wants, and $200 for savings. What percentage of the budget is allocated to savings
What is 10%
This type of expense, such as rent, stays the same every month regardless of usage.
Fixed Expense
This type of account, which holds cash for everyday expenses, is considered an asset on a net worth statement
What is a checking account?
This is the main purpose of a savings account
Savings or for saving for goals
This budgeting method requires you to justify every dollar of your income, starting from zero, rather than basing it on previous spending
What is zero-based budgeting?
If your total expenses for the month are $2,200, and your income is $3,000, how much should you allocate towards savings according to the 50-30-20 rule
What is $600?
This term refers to the money spent on regular or necessary costs, like rent, utilities, and groceries, that are included in a budget
What is expenses?
If you own a car valued at $10,000 and still owe $4,000 on it, this amount would count towards your net worth
What is $6,000
Financial experts recommend keeping 3-6 months’ worth of living expenses in this type of savings account to cover unexpected costs
What is an emergency savings account?
In this budgeting method, cash is divided into different envelopes, each representing a category of expenses, to prevent overspending
What is envelope budgeting?
You follow the 50-30-20 rule. If you want to spend $1,200 on your wants, how much income do you need to earn in a month
What is $4,000?
A windfall is an example of which type of income
unanticipated or unexpected
This term describes the total value of assets like cash, investments, and property minus any debts or obligations
What is Net worth?
Unlike checking accounts, savings accounts are limited to this number of monthly withdrawals by federal law
What is six?
This is the most popular method of budgeting
What is the 50-30-20 rule?
You earn $6,000 per month. Using the 50-30-20 rule, how much should you allocate for your needs, wants, and savings? Break it down into three categories