The Basics
Which of the following is a “want” not a “need”?
a. shelter
b. medicine
c. car
d. food
Car
Assets-Liabilities=
Net Worth
50% fixed expenses, 30%, wants, 20% needs
50/30/20 Rule
SMART
Specific
Measurable
Attainable
Realistic/relevant
Time bound
Largest expense.
Mortgage/rent payment
Jamal started a landscaping business. He earns money each week mowing lawns, pulling weeds, and trimming hedges. He is paid by the hour. The money he earns is called:
a. debt
b. price
c. income
d. saving
Income
Budget
Gross pay- deductions=
Net pay
More than one year
Long term goal
Rent, utilities, and amenities.
Direct costs for renting
What is the meaning of value?
a. Value is the total amount of money you spend in one day
b. Value is what a good or service is worth
c. Value is what you pay when an item or service is on sale
d. Value is the price of an item, minus tax
B.
Set financial goals is the first step.
First step in creating a budget.
FICA
Social security
Medicare
Determine homeownership needs.
Step 1 in home buying process
Rent and insurance are examples of these kinds of expenses.
Fixed expenses
Income and expenses.
Components of a budget.
1. Track current income and expenses
2. Create personalized income and expense categories
3. Allocate money to each category
4. Implement and control
5. Evaluate and make adjustments
Steps in creating/tracking a budget.
Largest required tax deduction.
Federal withholding income tax
Down payment and closing costs
Two significant expenses in homebuying.
Indicates the monetary value of all possessions that a person or household owns, minus the total amounts owed to others.
Wealth
Decrease liabilities will increase this.
Net worth
Envelope system
Apps
Create spreadsheet
Control methods
This form determines amount of pay that will be deducted for federal income taxes.
W-4
20%
Down payment requirement for home buying.