Budgeting Blunders
70% / 20% / 10%
What is a framework for budgeting - spending 70%, save 20%, give 10%
Avoid interest on purchases by doing what?
What is paying cash, using debit cards, or paying off credit cards in full each month?
20-25% interest per year
Covers your personal possessions in an apartment
What is renter's insurance?
Allocating your funds across multiple companies or funds
What is diversification?
What is a budget?
Product reviews, asking other people, and reading about options are ways to do what?
Good debt helps build long-term value (like reasonable amounts of student loans or a mortgage); bad debt doesn’t (like credit card debt for clothes or tech)
What is the difference between good debt and bad debt?
The amount you pay out-of-pocket before insurance kicks in
What is a deductible?
Tracking the performance of the stock market in an investment portfolio instead of trying to beat it.
What is indexing?
Car or home Repairs, gifts, or irregular expenses
What types of things are commonly forgotten in budgets?
What is increasing your spending as your income goes up instead of saving more.
What is lifestyle inflation?
The projected long-term return on a major investment such as college, starting a business, or buying a piece of real estate.
What is return on investment?
This provides for loved ones left behind if you pass away unexpectedly
What is life insurance?
When stocks decline by at least 20% from a recent high
What is a bear market?
Who said "Save first and spend the remainder"
Who is Benjamin Franklin and Warren Buffett
What kind of strategies are waiting 24 hours or 30 days before buying something?
What are strategies to avoid impulse purchases?
Buying something now from a store but paying for it over time with interest
What is an installment purchase plan?
This pays you income if you are unable to work for the long-term
What is long-term disability insurance?
Buying stocks after they go down in value is called what kind of strategy?
A method where every dollar is assigned a job—income minus expenses equals zero.
What is a zero based budget?
The cost of what you give up when you choose one option over another
This ratio compares how much you would owe on a major purchase to how much you earn - lenders use it to assess risk.
What is a debt to income ratio?
Setting these amounts higher reduces your premiums and helps you avoid lots of small claims
What are high insurance deductibles?
A dollar invested in the global stock market in 1970 would be worth how much at the end of 2022?