Budgeting
What is the 50/30/20 rule?
A budgeting guideline that helps you allocate your money into 3 main categories:
50 - Needs
30 - Wants
20 - Savings
What is a creditscore?
(BONUS: what range is considered a good credit score?)
A numerical representation of someone's financial responsibility.
(BONUS ANSWER: 750+)
What is customer loyalty?
When customers repeatedly choose to buy from a brand because they trust it and are satisfied with their products or services.
What are fixed costs and variable costs?
Give me an example of each.
FIXED - Expenses that do not change on a monthly basis (ex. rent, insurance, loan payments)
VARIABLE - Expenses that fluctuate on a monthly basis (ex. groceries, entertainment, travel)
What are the two types of loans? Describe them.
1. SECURED - loan backed by collateral that the lender can claim if the borrower fails to pay back the loan (ex. house, car)
2. UNSECURED - given based on credit score & trust (most common type of loan)
What is the difference between revenue and profit?
REVENUE - Total amount of money generated from sales.
PROFIT - Remaining money after expenses have been deducted from revenue.
How does inflation affect your savings over time?
(BONUS: What is a good alternative?)
Inflation reduces the value of your saved money.
(BONUS ANSWER: a good alternative is investing because your money will grow at a rate that outpaces inflation.)
What are the 2 types of interest? Describe them.
1. SIMPLE - interest rate calculated on principal amount
2. COMPOUND - interest rate calculated on both principal amount and accumulated interest
What is a break even point? (BONUS: Why is it important?)
A break even point is total revenue equals total costs.
(BONUS ANSWER: It tells a business how much they need to sell in order to start making profit.)