REAL-WORLD BUDGETING
You earn $2,200/month after taxes. Your rent is $1,000. Utilities average $150. Transportation costs $200. How much money remains for food, savings, and personal expenses?
$850
What is the financial impact of a $35 overdraft fee occurring 3 times in one month?
$105 lost
What does APR stand for and why does it matter?
Annual Percentage Rate: shows total borrowing cost.
What is the purpose of a W-4 form?
Tells employer how much tax to withhold.
Why can lifestyle inflation be dangerous?
Spending increases faster than income.
Name two reasons why spending more than 50% of income on rent is risky.
Less savings, higher debt risk, paycheck-to-paycheck living.
Why might a bank place a “hold” on a deposited check?
To verify funds and prevent fraud.
You owe $1,000 on a credit card with 25% APR. Why is paying only the minimum dangerous?
High interest, long payoff time.
Why might someone owe money during tax season even if taxes were withheld?
Under-withholding, multiple jobs.
What is predatory lending?
High-interest, unfair loan practices.
If you save $75/month, how much will you have after 1 year?
$900
Name two advantages of a credit union over a traditional bank.
Lower fees, better interest rates, member-owned.
Name three factors that affect a credit score.
Payment history, credit utilization, credit length.
What’s the difference between a 1099 and a W-2 job?
Independent contractor vs employee.
Why is an emergency fund more important than luxury spending?
Protects against unexpected expenses.
Your phone bill increases by $40/month. What must happen in your budget to avoid debt?
Reduce another category or increase income.
If your savings account earns 2% annual interest, will inflation at 4% increase or decrease your purchasing power?
Decrease
If your credit limit is $1,000, what balance keeps you under 30% utilization?
$300
Why do freelancers need to save money for taxes throughout the year?
Taxes aren’t automatically withheld.
Name two warning signs of a financial scam.
Urgency, requests for personal info.
You miss one paycheck. Name three expenses that should be prioritized first.
Housing, utilities, food, transportation.
What does FDIC insurance protect—and what does it NOT protect?
Protects deposited money (up to $250k), not investments.
Why can “Buy Now, Pay Later” plans still damage your finances?
Hidden debt, missed payments, poor budgeting.
Name two public services funded by payroll taxes.
Social Security, Medicare.
You receive a $3,000 refund. List three smart uses for that money.
Savings, debt payoff, emergency fund.