Budgeting
What is the main purpose of a budget?
To control spending and plan where money goes.
What is the goal of investing?
To grow money over time.
What is the main difference between a debit card and a credit card?
Debit uses your money; credit borrows money.
What government level collects income taxes in the U.S.?
The federal government.
What is the safest place to store emergency savings?
A savings account
What type of expense stays the same each month, like rent?
A fixed Expense
What do we call the money earned from an investment, like dividends or interest?
Returns
What is interest on a credit card?
Extra money paid for borrowing.
What tax funds programs like Social Security and Medicare?
Payroll tax.
Why is an emergency fund important?
It helps cover unexpected expenses without debt.
What type of expense can change each month, like eating out?
A variable Expense
Why are stocks considered riskier than bonds?
Their value can change more often and more dramatically.
Which is better for your credit score: paying the minimum or paying the full balance?
Paying the full balance.
What is a tax deduction?
An expense that reduces taxable income.
How many months of expenses is a common emergency fund goal?
3-6 months
If your monthly income is $2,000 and your fixed expenses are $1,200, how much is left for variable expenses and savings?
800
What does diversification mean in investing?
Spreading money across different investments to reduce risk.
What does credit utilization mean?
How much of your available credit you are using.
What happens if you earn income but don’t file taxes?
You may owe penalties or interest.
What type of savings account usually earns more interest?
A high-yield interest account
Why should savings be included in a budget like a bill?
To make saving consistent and a priority.
Why is investing at a younger age powerful?
Because compound interest has more time to work.
How can paying bills on time improve your financial future?
It raises your credit score and lowers borrowing costs.
Why might someone owe taxes even after having money withheld from their paycheck?
Not enough was withheld during the year.
Why should emergency savings be kept separate from spending money?
To avoid using it for non-emergencies.