Definitions
Money received on a regular basis, typically from a job or investments.
Income
What is the first step in creating a budget?
Calculate your total monthly income
Why is budgeting important?
To help you better manage your money
Budgeting requires sacrificing all luxuries and entertainment
False
What is the difference in gross pay and net pay?
Gross pay is before taxes are taken out, net pay is after taxes and deductions.
A plan on how to spend and save your money
Budget
Why is it important to review and adjust your budget regularly?
To accommodate changes in income, expenses, or financial goals.
When creating a budget you need to set what kind of goals?
SMART: Specific, Measurable, Achievable, Realistic, Time-Bound
We are never too young to save for retirement
True
What percent is recommended to spend on transportation?
12-16%
Money spent on goods and services including bills, groceries, and entertainment.
Expense
What does it mean to "pay yourself first” in budgeting?
Take a portion of your income to savings or investments before paying bills or expenses.
What are some examples of things you can use your savings for?
Emergency fund, retirement, investments, short-term goals, and long-term goals
Budgeting helps individuals prioritize their spending based on their goals
True
What percent is recommended to spend on food?
10-15%
Money set aside for expenses, emergencies, and retirement
Savings
How can you track your expenses to create a budget?
Keep receipts, use budgeting apps, or log expenses in a spreadsheet
You need to differentiate between these when you are budgeting
Wants and needs
It is always better to use cash for expenses.
False
What percent is recommended to spend on housing?
30%
Budget strategy where you put every dollar of income to a specific category.
Zero based budgeting or balanced budget
What is the most common budgeting strategy?
The 50/30/20 budget
Budgeting _____ can be a handy way to access account information including upcoming expenses and credit scores from your phone.
Apps
Creating a budget is when you calculate your monthly income, pick a budgeting method and monitor your progress.
True
What are the recommended amounts in a 50/30/20 budget?
50% Needs, 30% Wants, 20% Saving