Budgeting 101
What is a budget?
A personal spending plan
Income not used for consumption
Savings
This allows people to track how and where their money is spent
A budget
If your income is $2000 per month, how much should you spend or allocate each month to stay on budget?
No more than $2,000
Expenses that remain the same from month to month (Car payment, House Payment, etc.)
Fixed Expenses
Expenses that change from month to month (Clothing, groceries, etc.)
Variable Expenses
What is one advantage of having a Credit Card?
It allows you to make purchases without carrying lots of cash
Buy now, pay later
Your earnings from work or investment
The cost of borrowing money.
Interest
What is Dr. H's budget formula for teenagers?
70-20-10
In budgeting, income MUST EQUAL or be more than
Expenses
How do Credit Card Companies make money?
Late Fees and Interest
One thing many professional athletes had in common after retirement is that...
They thought their money was an endless flow
Why is it wise to have extra money in your savings?
for emergency expenses.
You need to set these when budgeting for a long time.
Goals
Which two things does a budget compare?
Income and expenses
When you make a credit card purchase at a store, who do you agree to pay?
The credit provider
To avoid impulse spending, you should make this before shopping.
A shopping list and stick to it
A budget helps individuals and businesses to avoid this financial problem.
Debt
You should track your spending for this long at one time.
One month
(Save receipts and go over spending and compare it with your income)
Name one tool or method that is used for budgeting.
A spreadsheet or budgeting app
What is the best way to avoid credit card debt?
Don't spend more money than you have
The cost of the next best alternative use of money, time, or resources when one choice is made over another is called what?
The Opportunity Cost
Redirect your income from being consumed, to create benefits in the future
Investment
Dr. Hutchinson's Grandfather, Sgt. Chester Narewski would say, "It's not how much money
It's not how much you make that matters, it's how you save that matters."