Paycheck & Income
What is the difference between gross pay and net pay?
Gross pay is the total earned before taxes/deductions; Net pay is the take-home pay after taxes/deductions.
Explain the "Pay Yourself First" budgeting strategy.
Prioritizing saving by putting a portion of your income into savings before paying other expenses.
Define the difference between a need and a want, and give one example of each.
Needs are essential for living/working (e.g., shelter, food); Wants are nice to have but non-essential (e.g., streaming services, dining out).
Name three housing costs you can expect to pay in addition to basic rent.
Utilities (water, gas, electricity), renter's insurance, parking fees, internet/cable.
What tool or measurement at the grocery store allows you to compare the price of different brands or sizes accurately?
Unit Price.
Which term describes the amount of money you take home after taxes and deductions?
Net Pay.
What is the 50/30/20 rule?
50% Needs, 30% Wants, 20% Savings/Debt repayment.
What is a fixed expense? Give two examples.
An expense that remains constant every month (e.g., Rent, Auto lease).
What legally binding agreement do you sign when renting an apartment, and what upfront fees/payments are usually required?
Residential Lease; upfront fees include security deposit, first/last month's rent, application fees.
Name two strategies to save money when grocery shopping.
Use a shopping list, compare unit prices, buy store brands, use coupons/sales.
What is salary, and how does it differ from hourly wages?
Salary is a fixed annual amount paid regularly regardless of hours worked; hourly wages pay a set rate per hour worked.
Describe how Zero-Based Budgeting works.
Allocating every single dollar of income until total income minus total expenses/savings equals zero.
What is a variable expense? Give two examples.
An expense that fluctuates from month to month (e.g., Gas, Groceries).
List two fixed costs and two variable costs associated with car ownership.
Fixed: Insurance, car loan/lease payment, registration.
Variable: Fuel, maintenance/repairs, toll fees.
How can popular budgeting apps and financial automation assist in sticking to a financial plan?
Apps link to accounts for real-time tracking, while direct deposit/auto-transfers automate "Paying Yourself First"
True or False: Generally, the minimum wage is lower than the living wage across the U.S.
True.
How does the Cash Envelope Budgeting system help prevent overspending?
Allocating fixed physical cash into categorized envelopes; once an envelope is empty, spending in that category stops.
Classify each of the following as Fixed or Variable: Rent, Auto Lease, Gas, Groceries, Concert Tickets, Tuition.
Fixed: Rent, Auto lease, Tuition.
Variable: Gas, Groceries, Concert tickets.
How can your geographic location impact your transportation options and overall cost of living?
Urban areas offer public transit, reducing auto expenses; rural areas require car ownership and higher fuel costs.
Define cost of living and emergency fund.
Cost of living is the money needed to sustain a standard of living; Emergency fund is set-aside cash for unexpected expenses.
What is the term for when you earn more income than your total expenses in a month?
Budget Surplus.
You realize at the end of the month that you overspent. Name two strategies you can use next month to prevent this from happening again.
Track spending daily/weekly, adjust discretionary categories, set spending alerts, or use budgeting apps/envelopes.
Why do variable expenses tend to be harder or easier to adjust than fixed expenses when cutting back?
Variable expenses can be reduced immediately by changing behavior, whereas fixed expenses require contract changes or moving.
What factors should you consider when choosing a location to live beyond basic housing costs?
Proximity to work, safety, quality of schools, public transit access, cost of living, community amenities.
What special strategies can help an individual successfully budget on a variable or irregular income?
Base budget on baseline minimal income, build a larger emergency buffer, save surplus during high-income months.