Budgeting
What is budgeting?
Budgeting is planning how you will spend, and save your money
What is saving?
Saving is putting away your earnings for a later time, instead of spending it right away.
What is a credit score?
A number between 300-850 that estimates how likely you are to repay borrowed money (credit cards, loans, etc)
What is investing?
Investing is using money to produce more profit/income
What is the golden rule in budgeting?
Spending should never exceed income
What is the recomended first step to saving?
Immediately put away 10% of your income to be saved for your wants. However, make sure you spent your income on your needs (required expenses) first.
How do credit scores impact interest rates?
Low credit scores result in higher interest rates than high credit scores.
Explain the difference between savings and investing.
- Savings is setting money aside in safe, and low interest savings accounts or under the mattress (piggy bank)
- Investing is about taking calculated risk to earn higher returns
What is the difference between discretionary and required expenses.
Discretionary expenses are fun expenses -- for wants. Required expenses go towards your needs.
Explain long vs. short term saving.
Long term saving is saving up for a longer period of time -- usually for more expensive goods. While short term saving is saving for a short period of time -- usually for cheaper goods.
How do credit scores impact job prospects?
Credit history gives insight about your financial behaviors. Which can determine whether you get hired or not in some cases.
Name 3 ways that you can invest.
- Stocks
- Bonds
- Cash
- Real Estate/Property
What is the first step to budgeting?
Calculate your monthly income.
Allows you to determine how much money you need to save up for a specific purchase so you can achieve your goal in a timely manner.
At what age are you able to get your own credit card?
18
Explain the benefits of investing.
- Gaining higher potential returns
- Achieving your long term financial goals
What is the 50,30,20 rule?
- 50% of your income should go toward needs (expenses & necessities)
- 30% of your income should go toward wants (discretionary purchases)
- 20% of your income should go toward savings (Ex. emergency funds)
Describe the importance of saving.
- You will have money saved up for emergencies/rainy days.
- Saving creates healthy financial habits, and will benefit your future self!
Explain what an authorized user is.
Someone who is added to a credit card account. This can help them build credit history and kick-start their financial journey.
Finish the sentence: "Investing is..."
"Putting your money to work!"