Budgeting Strategies
Expenses that are essential for you to be able to live and function
needs
You earn a salary of $30,000 per year and decide to save 10% of your gross pay. You set a goal of creating a $9,000 emergency fund. How long will it take for you to achieve your goal?
3 years
A fixed amount that you are paid over a period of time, regardless of how many hours you work
Salary
A portion of the total cost of an item, such as a car or house, that must be paid at the time of purchase. The buyer will often take out a loan to finance the remaining balance.
Down Payment
What is another term for net pay?
take-home pay
A plan of your expected income and how you will use it to meet your expected expenses over a period of time
budget
What is the unit price of a can of soup that is 20 ounces and $3.55?
$0.1775 -> $0.18
A strategy where you save a specified amount of your paycheck before doing anything with the rest of your money
Pay yourself first
Any items subtracted from your paycheck, including state and federal income taxes, Social Security, health insurance or 401(k) contributions
deduction
Money that is received from work, investments, business, etc.
income
What does the 50/30/20 Budget consist of?
50% - Needs
30% - Wants
20% - Savings/Debt Repayment
You earn a salary of $40,000 per year and decide to save 15% of your gross pay. You set a goal of creating a $15,000 emergency fund. How long will it take for you to achieve your goal?
2.5 years
Total earnings after payroll taxes and other deductions have been taken out
Net pay
The amount of money needed to sustain a certain level of living, including basic expenses such as housing, food, taxes, and healthcare; often used when comparing how expensive it is to live in one city versus another
cost of living
If a Dr. Pepper costs 3.75 for 20 ounces, what is the unit price?
0.1875
A budgeting method where money for monthly spending is taken out in cash and placed in labeled envelopes according to budget categories. Spending occurs only from the corresponding envelopes.
Cash Envelope Budget
Connor has a summer internship at a technology company and is paid $5,000. After Federal and state taxes, Social Security, and Medicare are deducted, his take-home pay is $4,200. What is is gross pay?
$5,000
When renting an apartment, what may be required when you sign your lease? (Give me one thing)
proof of employment
first and last month's rent
a security deposit
Total earnings before any deductions are taken
Gross Pay
When your expenses exceed your income
Deficit
A budgeting method where every anticipated earning is assigned a role to be spent, saved, or invested somewhere, so there's no "leftover" money with no purpose
Zero-Based Budget
Which jar of salsa has the LOWEST unit price?
Salsa A: $5.55 for 32 ounces
Salsa B: $4.99 for 24 ounces
Salsa C: $3.29 for 12 ounces
Salsa A: 0.17
Salsa B: 0.21
Salsa C: 0.27
Give an example of a fixed, variable, and unexpected (whammy!) expense.
Fixed:
Variable
Unexpected
A cost that appears irregularly or that changes in amount (e.g., utility bills)
variable expense
A good rule of thumb when budgeting for a home is to expect to make a _______ down payment?
20%