Wants vs. Needs
This is something you must have to survive, like food or shelter.
What is a need?
A plan for how you will spend your money.
What is a budget?
Sam uses this app to track their spending.
What is a budgeting app? (or “What is Mint?” if you want a real example)
The amount of money you have left over after paying all your expenses.
What is leftover cash? (or “What is net income?”)
According to the 50/30/20 rule, this percentage of your income should go towards needs.
What is 50%?
This is something you would like to have, but it's not essential for survival, like a new video game.
What is a want?
The money you earn before taxes are taken out.
What is gross income?
Andrew puts money into this account each month to help pay for college.
What is a savings account?
A record of everything you spend money on.
What is an expense tracker?
According to the 50/30/20 rule, this percentage of your income should go towards wants.
What is 30%?
Jack needs to pay for this every month so he can call friends and family.
What is a phone bill?
Setting aside money regularly to reach a future goal.
What is saving?
Josh puts aside money each month in case their car breaks down or an unexpected bill comes up.
What is an emergency fund?
Putting money aside for unexpected expenses, like a car repair.
What is an emergency fund?
According to the 50/30/20 rule, this percentage of your income should go towards savings and debt repayment.
What is 20%?
Rent is an example of this, and it's usually the biggest part of a budget.
What is a fixed expense?
Costs that stay the same each month, like rent, car payments, or insurance.
What are Fixed expenses?
Catherine saves money on this expense by making it at home instead of buying it at a coffee shop.
What is coffee?
The cost of borrowing money, usually expressed as a percentage.
What is interest?
If Kayleigh earns $1000 every two weeks, according to the 50/30/20 rule, they should spend no more than this amount on needs.
What is $500?
Deciding between buying groceries (a need) and going to the movies (a want) is an example of this important budgeting skill.
What is prioritizing?
When your expenses are greater than your income, you have this.
What is a deficit?
Frankie decided to cut back on this expense to reduce how much he spend on streaming subscriptions so they could save more money for a new phone.
What are entertainment expenses?
A credit score is a three-digit number that reflects this.
What is your credit history or financial trustworthiness?
If Sarah wants to increase her savings, she could reduce spending in this category of the 50/30/20 rule.
What is wants?