What is....?
What is a budget?
A budget is a plan you write down to decide how you'll spend your money each month. A budget shows you: how much money you make. how you spend your money.
What is the first step to building a budget?
The first step is listing your income, including your regular salary, income from side hustles, interest-bearing accounts, and gifts.
Who is often credited with popularizing the concept of zero-based budgeting for individuals?
Dave Ramsey is known for popularizing the concept of zero-based budgeting, where every dollar you earn is assigned a job (spending, saving, debt repayment, etc.) until your income minus your expenses and allocations equals zero.
True or False: Technology can help with budgeting.
True. Computer budgeting software, mobile banking apps, and automatic paycheck deductions can help you create a budget, monitor spending, and track progress toward financial goals.
What is a Procedural budgeter?
In life and in finances, you thrive knowing you have a plan. Implementing and sticking to a structured, proactive budgeting method can help you set clear goals, track progress and know exactly where your money is going.
What is a fixed expense?
A fixed expense is a recurring expense that is usually always the same amount, such as mortgage payments, rent, and loan payments.
What did the word "budget" originally mean?
The word "budget" comes from the Latin word "bulga", meaning a leather bag or knapsack.
The modern meaning of the word dates back to medieval France, where a "budgeter" was a custodian in charge of handling a company's funds kept in a leather bag called a "bougette".
Which famous investor said, "Do not save what is left after spending, but spend what is left after saving"?
Warren Buffett is famous for this quote, emphasizing the importance of prioritizing saving by setting aside funds for savings and investments before covering discretionary expenses.
True or False: Once you’ve set up a budget, you can just set it and forget it.
False. Creating a budget is just one step on the larger financial journey. Even with all the online apps and automatic payment software, you still need to constantly monitor your income, your spending, and your savings so that you can adjust your budget to best suit your financial needs — now and for the future.
What is a Hands-on budgeter?
As a visual person, you like knowing where your money is going and how you’re tracking toward your goal. Choose a budgeting tool that allows you to see clear visual progress to help understand how much you’re spending and saving each month.
What is the 50/30/20 rule in budgeting?
The 50/30/20 rule is a popular budgeting strategy that allocates your after-tax income into three categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment.
What is discretionary income?
Discretionary income is the extra income you have left after paying for necessities like taxes and rent.
Why is it important to track small expenses?
As Benjamin Franklin famously said, "Beware of little expenses. A small leak will sink a great ship." Small, unmonitored expenses can accumulate and lead to significant financial problems.
True or False: There is only one right way to make a budget.
False. Each individual or family's financial situation is unique, and there are many different budgeting methods, such as the 50/30/20 rule or the zero-sum budget.
What is a Goal-driven budgeter?
As an ambitious person, you’re likely more motivated to budget when it’s directly connected to tangible outcomes. If that’s the case, design your budget for your goals, not just to track spending.
What is the total of all money earned in a given period of time called?
Income
What is the Debt-to-Income ratio?
The Debt-to-Income (DTI) ratio is a personal finance measure that compares how much you earn to how much you owe.
How can you apply this quote to budgeting?
“A good roadmap will get you to your destination.”
― FLOYD TALBOT, Customer-Driven Budgeting
(open answer)
True or False: Budgeting restricts your spending and means you can't have fun.
FALSE. Budgeting helps you prioritize spending, allowing for both needs and wants, and can lead to guilt-free enjoyment by aligning spending with financial goals.
What are Envelope budgeters (Cash Stuffers)?
People who use a tactile method where cash is physically divided into envelopes, each representing a spending category.
What is the importance of having an emergency fund?
An emergency fund acts as a financial safety net, helping you cover unexpected costs like medical bills or car repairs without having to go into debt.
What does the phrase "pay yourself first" mean?
This means prioritizing saving and investing before covering discretionary expenses.
What is a common psychological bias that makes saving money challenging?
Hyperbolic discounting is the tendency to prioritize short-term gratification over long-term benefits, making it difficult to resist immediate spending temptations in favor of saving for future goals.
True or False: Setting clear financial goals is not important when creating a budget.
FALSE. Setting clear financial goals is crucial for guiding your saving, spending, and investing decisions, helping you to stay focused and motivated when creating a budget.
What are No-budget budgeters?
Stupid