Banking Basics
What is a checking account primarily used for?
Everyday spending, paying bills, and making purchases.
What is the first step in creating a budget?
List all your income sources.
Why is it important to save money?
To prepare for future needs and emergencies.
What is income?
Money you earn or receive.
What is a "want" in terms of spending?
Something you don’t need but would like to have, such as a new video game or a concert ticket.
What is a savings account used for?
To store money and earn interest, generally for long-term savings.
What is the second step in creating a budget?
List all your expenses.
What is an emergency fund?
Money set aside to cover unexpected expenses.
What are expenses?
Money you spend on goods, services, and bills.
What is one benefit of tracking your expenses regularly?
Tracking your expenses helps you understand where your money is going, allowing you to identify areas where you can cut back and save more.
Name one thing you need to open a bank account.
ID, proof of address, or Social Security Number.
Name one way you can reduce your monthly expenses.
Cut back on non-essential spending, like eating out or entertainment.
What’s the benefit of saving in a high-yield savings account?
You earn more interest on the money you save.
Is rent a fixed or variable expense?
Fixed expense.
What is one way to avoid impulse purchases?
Make a shopping list and stick to it, or wait 24 hours before buying.
What does ATM stand for?
Automated Teller Machine.
What is a fixed expense?
An expense that doesn’t change each month, like rent or car payments.
If you want to buy a $500 phone in 5 months, how much should you save each month?
$100 per month.
What’s the term for when your expenses are higher than your income?
A deficit or being in debt.
What is a good strategy to compare prices before making a big purchase?
Shop around or check prices online to find the best deal.
What’s the difference between online banking and in-person banking?
Online banking allows you to manage your account digitally, while in-person banking requires visiting a physical bank branch.
How do you calculate how much you have left at the end of the month?
Subtract your total expenses from your total income.
What is compound interest?
Interest earned on both the initial savings and the interest already accumulated.
What is discretionary income?
The money left over after all essential expenses are paid.
How can using cash instead of credit help you spend less?
You can physically see how much you’re spending and may be less likely to overspend.