Budgeting Basics
This is the money you earn before taxes and deductions are taken out.
Gross pay
This budgeting method divides spending into categories like savings, needs, and wants often using percentage targets. Name it.
50/30/20 rule
Renting typically requires this upfront payment that protects the landlord against damage or unpaid rent
Security deposit
Buying gas, insurance, and maintenance are examples of these types of transportation costs (fixed or variable?).
Variable costs
Name one easy strategy to reduce grocery bills when shopping
Use coupons, buy store brands, shop sales
The part of your pay you actually take home after deductions; it’s what you can spend
Net pay
A budgeting strategy where you assign every dollar a job so your income minus expenses equals zero is called what?
Zero-based budget
Name two essential items a person should check or ask about before signing a lease. (2 answers)
Examples: length of lease and total monthly costs; pet policies; who pays for repairs
Give one financial advantage and one non-financial advantage of using public transportation instead of owning a car.
Financial advantage: lower monthly cost;
Non-financial: reduces stress of driving, access to routes.
Explain how meal planning can lower both grocery and dining-out expenses
Plan meals to buy only needed ingredients, cook in batches to reduce dining out
Name two main reasons people create and use a budget. (2 answers)
Examples: track spending; reach savings goals; avoid overspending.
List two pros and two cons of using a cash-envelope system for budgeting
Pros: tangible control, prevents overspending; Cons: inconvenient, not safe for big purchases
Provide one financial indicator that suggests someone may be ready to buy a home.
Example: steady income, stable job, enough for down payment and closing costs
Describe one way geographic location can affect transportation choices and costs.
Rural areas often require car ownership; cities often offer public transit reducing need for a car.
Define inflation in one sentence and describe how it affects grocery budgeting.
Inflation: general rise in prices over time; it reduces purchasing power, so grocery budgets must increase
Classify the following as a need or a want: a monthly phone plan, prescription medication, streaming subscriptions. (Identify each)
Phone plan: want (could be debated if essential); prescription medication: need; streaming: want.
Describe how a sinking (or Whammy) fund works and give one example of what you might use it for.
Save periodically for a known future expense (e.g., car repairs). Put money aside in a separate account.
Explain how utilities should be factored into a monthly housing budget. Include at least two specific utilities.
Add estimated utility costs (electricity, water, internet) to monthly housing expense line.
Calculate which is cheaper monthly: renting a bike-share for 30 per month plus occasional $3 rides (assume 4 rides), or owning a cheap used bike that costs 150 one-time with $5 monthly maintenance over a year. (Show reasoning)
Bike-share: 30+(4×3)=30+(4×3)=42/month.
Owning bike: 150 one−time+150 one−time+5×12= 210 first year→monthly average210firstyear→monthlyaverage210/12 = $$17.50/month first year (cheaper).
Explain calculations
Given a weekly grocery budget of $$75, calculate the monthly grocery budget (assume 4 weeks). Also state one way to adjust when prices rise due to inflation.
Monthly = 75×4=75×4=300; adjust by reducing non-essential items or substituting cheaper brands
Explain how unexpected expenses should be handled in a budget and name one simple method to prepare for them.
Build an emergency fund or include a contingency line item; e.g., set aside a fixed percentage each month
Compare and contrast using a spreadsheet vs. a budgeting app: give one advantage and one disadvantage for each.
Spreadsheet advantage: customizable; disadvantage: manual entry. App advantage: automates tracking; disadvantage: privacy or cost
List three items that should be included in a roommate agreement to fairly share costs
Rent split method, utilities division, damage responsibility, move-out procedures.
Explain tradeoffs (cost and convenience) between leasing a car and buying a car outright.
Leasing: lower monthly payments but mileage limits and no ownership;
Buying: higher payments but eventual ownership and resale value
Create a simple three-step plan for a student to reduce dining-out costs while still enjoying occasional meals out
Plan weekly limits, choose cheaper restaurants, split meals or use coupons