Budgeting
What is a budget?
A plan for how you will spend and save your money.
What is a credit score?
A number that shows how trustworthy you are to borrow money.
What is a checking account used for?
Everyday spending, paying bills, and direct deposit.
What is a stock?
A share of ownership in a company.
What is rent?
A regular payment made to live in a home or apartment owned by someone else.
What is the 50/30/20 rule in budgeting?
50% for needs, 30% for wants, and 20% for savings or debt repayment.
What does APR stand for and why does it matter?
Annual Percentage Rate — it tells you how much borrowing will cost per year.
What is overdraft protection?
A bank service that covers purchases when your account runs out of money.
What is a mutual fund?
A pool of money from many investors to buy a mix of stocks or bonds
What is net income?
Your take-home pay after taxes and deductions.
What is an emergency fund and why is it important?
Money saved for unexpected expenses like car repairs or medical bills.
Name two things that affect your credit score.
Payment history and credit utilization.
What is compound interest?
Interest earned on both the money you save and the interest you've already earned.
What does it mean to diversify your investments?
Spread your money across different assets to reduce risk.
Why should renters get insurance?
To protect their belongings from fire, theft, or damage.
Why should you track your spending regularly?
To stay within budget, identify waste, and meet financial goals.
What is a payday loan and why are they risky?
A short-term, high-interest loan — they often trap people in debt.
What is the difference between a bank and a credit union?
Banks are for-profit; credit unions are non-profit and member-owned.
What is the risk-return tradeoff?
Higher returns usually come with higher risk.
What is the true cost of a car loan beyond the monthly payment?
Interest, insurance, maintenance, and fees.
What is the opportunity cost of not having a budget?
Wasted money, missed savings opportunities, and financial stress.
What are two smart ways to build credit?
Pay bills on time and keep credit card balances low.
What is the FDIC, and why is it important?
The Federal Deposit Insurance Corporation protects your bank deposits up to $250,000 if the bank fails.
How is a Roth IRA different from a traditional IRA?
Roth IRA contributions are taxed now, withdrawals later are tax-free.
What are the long-term benefits of starting retirement savings as a teen?
More time for compound interest to grow wealth significantly.