Income and Expenses
Required payments to the government that come out of your paycheck,
What are taxes?
This type of expense is something you must pay for to meet basic needs, such as housing, food, and transportation.
What is an essential expense?
In money management, these are the two categories used to separate essential items you must have, like food and housing, from nonessential items you can live without, like entertainment.
What are needs and wants?
This occurs when you spend more money than you have in your checking account, and your bank covers the difference—often charging a fee.
What is an overdraft?
Spending more than you can afford or missing payments can damage this number that shows how reliable you are with borrowing.
What is your credit score?
This term refers to the total amount of money you earn before any taxes or deductions are taken out.
What is gross income?
This term refers to the total cost of basic needs you must pay for regularly, including things like rent, groceries, utilities, and transportation.
What are living expenses?
These are financial goals you plan to achieve within a short period of time, usually within a year, such as saving for a new phone or a small purchase.
What are short-term goals?
This payment method takes money directly from your checking account to pay for purchases, instead of borrowing money.
What is a debit card?
This payment option allows you to borrow money from a bank or company to buy goods or services now and pay later, often with interest if not paid on time.
What is a credit card?
Experts often recommend following this rule: you should be putting this percentage of your income into savings.
What is 10% of your income?
In a budget, these are the groupings of expenses or savings goals within a plan for spending or saving over a certain period of time.
What are budget categories?
A key part of managing your money is doing this regularly to see where your money is going, which helps prevent overspending.
What is tracking your spending?
This form of borrowing gives you a large sum of money upfront for things like a car or college, which you repay over time with interest.
What is a loan?
This three-digit number summarizes your creditworthiness and is used by lenders to decide if you can borrow money and at what interest rate.
What is a credit score?
Experts recommend having this amount of money set aside in an emergency fund to cover living expenses in case of job loss or unexpected costs.
What is six months of living expenses?
These two types of expenses describe costs that stay the same each month, like rent, versus costs that can change, like entertainment or groceries.
What are fixed and flexible expenses?
Following this financial practice helps you plan how to use your money, track expenses, and make sure you have enough for both needs and savings.
What is budgeting?
You might use this method of payment when making a large payment, such as a down payment on a house or car, or paying your rent.
What is writing a check?
Failing to make a required payment on time can hurt your credit history and lower this number that reflects your financial reliability.
What are late payments?
This financial strategy means setting aside money for savings before paying bills or spending on anything else, helping you build savings consistently over time.
What is paying yourself first?
When the cost of goods and services increases, this financial strategy involves adjusting your budget by spending less, earning more, and prioritizing your needs over wants.
What is budgeting to cover expenses?
This money management strategy involves sometimes saying “no” to short-term desires so you can save for more important future goals, like a car, college, or emergency fund.
What is prioritizing needs over wants?
At age 26, this important cost for medical care typically becomes your responsibility, as you are no longer allowed to stay on a parent’s plan.
What is health insurance?
Buying items on credit, such as electronics, furniture, or a car, and not paying on time can appear on this detailed record that lenders review before approving loans.
What is a credit report?