Budgeting 101
What is the first step in creating a budget?
Track your spending
True or False: When using a credit card, you are borrowing money from a bank or financial services company?
True
When you have a stock you have _____ in a company
Ownership
Why is diversification important in investing?
to reduce risk by spreading investments across different asset classes or sectors
True/False: You can have insurance for your hair
True
Name three categories you should include in your budget.
Needs, wants, savings
What factors affect your credit score?
Payment history, credit utilization, inquiries
What is a dividend?
Payment made to shareholders
How can you diversify your investments?
Invest in different types of assets
What is the purpose of health insurance?
Covers the cost of Health-related expenses
Why is it important to track your spending?
Helps you stay within your budget
How does a credit card impact your credit score if you only make minimum payments?
It can lower your credit score
What is a mutual fund?
Pooled funds invested in various securities
Name one example of an asset that provides income.
bonds, dividend-paying stocks, rental properties, and interest-bearing accounts
Name a type of insurance this is typically required by law
Auto, health, homeowners
What is the 50/30/20 rule in budgeting?
50% for needs, 30% for wants, 20% for savings
What is the difference between a credit score and a credit report?
Credit score is a number, credit report is a detailed history
What is the difference between a stock and a bond?
Stocks represent ownership in a company, while bonds represent debt owed by a company or government
What are the benefits of investing in an index funds?
Lowers your risk by not putting all your eggs in one basket
What does life insurance cover?
Covers loss of life
How can you adjust your budget if you consistently overspend in one category?
Adjust spending in overspent category
Name two ways you can you improve a poor credit score?
Pay bills on time, reduce credit card balances
What are some potential risks of investing in the stock market?
Market fluctuations, company performance, market volatility, company bankruptcies, economic downturns, and loss of principal investment
This investment strategy involves investing in a mix of asset classes, such as stocks, bonds, and cash equivalents.
Asset Allocation
What is liability insurance?
Protects against legal claims