Budgeting Basics
Need = things you can't live without (food, water, clothing, shelter)
Want = anything that is not a need (fancy clothes, candy, soda, fast food, video games)
Is saving money a "need" or a "want?"
NEED
How often should you check your bank account?
Joe spent
$100 on groceries
$50 for his phone bill
$500 on rent
$20 at the arcade
What is the total amount Joe spent?
$100 groceries + $50 phone = $150
$150 + $500 rent = $650
$650 + $20 arcade =
$670
What is the current annual inflation rate?
2.4%
What is a checking account?
- Home base for money
- Used for spending
- Usually does not pay interest
- Good for paying bills
- Comes with a debit card
What is a savings account?
- Extra account to store money
- used for saving
- pays interest
- Good for separating savings funds from normal spending money
- usually doesn't come with a debit card
Name one important document that someone could use to steal your identity
- Driver's license
- Social Security Number
- Passport
- Birth certificate
Beth is buys about $15 of fast food 4 times/month. How much money will she save in a month if she cuts down her fast food outing to 2 times/month?
$30
What is a Certificate of Deposit Savings Account?
An account that locks your money up for a certain amount of time. This account offers a higher interest rate than normal savings account. This money cannot be touched for the specified amount of time.
Expenses that stay the same every month. (Ex. Rent, phone bills)
What are some ways to save money while grocery shopping?
- Make a meal plan/shopping list
- Don't go shopping when hungry
- Avoid Pre-packaged items
- Don't buy items you wouldn't normally get because it is on sale?
- Buy generic brands instead of name brand items
Name 3 common phone service providers
- Verizon
- T-Mobile
- AT&T
- Mint Mobile
- Cricket wireless
- Sprint
You make $12/hr at your current job. How many hours do you need to work to pay for $60 of groceries?
5 hours of work
What is a 401k?
If anything is said about investing or retirement plan, they are correct
Give an example of a variable expense
Groceries, clothes, gas
What is the purpose of emergency savings?
It is to help pay for your NEEDS when you do not have any other income. Emergencies and nothing else. NOT fun money or money saved up for trips. You should start building up this account before saving for expensive wants.
What do you need to bring to the bank when making a withdrawal or deposit?
If you made $500 in your paycheck, how much should you put into savings?
(Hint: 20%)
$500 x .20 =
$100
What is life insurance?
This type of insurance is typically for people who are married and have kids. This is in case someone in the family dies. Life insurance will pay for the funeral and will pay the family a certain amount to help the transition.
What is the 50/30/20 rule?
50% toward Needs
30% towards Wants
20% towards Savings
You want to buy a $100 item in 3 months. What is your savings plan?
Make it up yourself
What is a SMART goal?
Specific
Measurable
Attainable
Relevant
Timely
If you spend $500/month on Needs, how much should you aim to have in your emergency savings?
$500 x 3 months = $1500
$500 x 6 months = $3000
Anywhere between $1500-$3000
How is net worth calculated?
Total assets (everything you own) - total liabilities (anything you owe)