Needs vs. Wants
What is a "need"?
Something essential for survival, like food, water, or shelter.
What is a budget?
A plan for managing income and expenses over a specific time period.
True or False: You should always save at least 10% of your income.
True (as a general rule, though it may vary).
What is an emergency fund?
Money saved for unexpected expenses, like medical bills or car repairs.
What does "interest" mean in terms of savings?
Money earned on a savings account or investment over time.
Which of the following is a want?
Vacation
Name one tool you can use to track your budget
A spreadsheet, an app like Mint, or a notebook or saving receipts.
What is the "50/30/20 rule"?
A budgeting guideline where 50% of income goes to needs, 30% to wants, and 20% to savings.
How many months’ worth of expenses should you ideally have in an emergency fund?
3 to 6 months.
What is a "fixed expense"
An expense that doesn’t change, like rent or a car payment.
Why is it important to identify needs versus wants in your spending?
To prioritize essential expenses and avoid overspending. to save as much money as you can
How do you calculate your disposable income
Subtract your fixed and essential expenses from your total income.
Name one way to cut down on discretionary spending.
Cook at home instead of dining out or cancel unused subscriptions. changing a phone plan cheaper to make it less same as wifi. look around to see if there is cheaper car insurance these are ways to save money
Name one type of expense that should NOT be paid from an emergency fund
Vacations or non-essential purchases.
What is the difference between a debit card and a credit card?
A debit card uses money directly from your bank account, while a credit card allows you to borrow money to pay later.
You get a $50 gift card. Do you spend it on new shoes (want) or groceries (need)?
Groceries.
You earn $100 from babysitting. How much should you save if you follow the 50/30/20 rule?
$20.
You have $1,000. Your rent is $700, food is $200, and you want a new gadget for $150. Do you have enough money?
No, you’ll overspend by $50.