Budgeting Basics
This type of budget category covers rent, food, and utilities.
What are fixed expenses?
The money you put aside for emergencies should cover this many months of expenses.
What is 3–6 months?
Paying off your credit card balance every month helps maintain a high score in this.
What is a credit score?
You receive a $1,200 paycheck. Your rent is $600. How much is left?
What is $600?
The “50/30/20” rule suggests 50% of your income goes to needs, 30% to wants, and 20% to this.
What is savings/debt repayment?
A savings account that earns higher interest than a traditional account is called this.
What is a high-yield savings account?
This type of debt is tied to an asset, like a house or car.
What is secured debt?
If you buy lunch every workday for $10, how much do you spend in 4 weeks?
What is $200?
Writing down all money you earn and spend is called this.
What is tracking expenses?
Stocks, bonds, and mutual funds are all examples of this.
What are investments?
The percentage you pay in interest on borrowed money.
What is the annual percentage rate (APR)?
You have a credit card balance of $500 with 20% interest. If you don’t pay, this grows.
What is interest owed?
Skipping your morning coffee run and making it at home is an example of this.
What is cutting discretionary spending?
This type of retirement account is funded with pre-tax dollars.
What is a traditional IRA or 401(k)?
Using one loan to pay off multiple high-interest debts is called this.
What is debt consolidation?
You set a goal to save $2,400 in a year. How much do you need to save each month?
What is $200?
This is the difference between your income and your expenses.
This is the difference between your income and your expenses.
The principle of spreading your money across different investments to reduce risk is called this.
What is diversification?
This term describes how easily you can turn an asset into cash.
What is liquidity?
You’re comparing two loans: one has a 4% interest rate, the other has 7%. Choosing the lower rate saves you money in this.
What is interest over time?