Budgeting Basics
This tool helps you track your income and expenses so you can spend within your means.
What is a budget?
A safety net for unexpected expenses, this fund should ideally cover three to six months of living costs.
What is an emergency fund?
This phrase means to set aside money for your future before spending on anything else.
What is 'pay yourself first'?
This pooled investment vehicle allows you to own a diversified collection of stocks or bonds with one purchase.
What is a mutual fund?
Interest calculated on both the original principal and all accumulated interest is known as this.
What is compound interest?
In personal finance, these are expenses that occur regularly every month, such as rent or utilities.
What are fixed expenses?
This federal agency insures deposits in savings accounts up to a limit of 250,000 dollars.
What is the FDIC (Federal Deposit Insurance Corporation)?
When you set up automatic transfers to your savings account on payday, you are using this strategy.
What is automated savings?
When you buy this, you own a fractional share of ownership in a company.
What is a stock?
This simple rule estimates how many years it takes to double your money by dividing 72 by your annual interest rate.
What is the Rule of 72?
This term describes spending on items you want but do not need, like entertainment or dining out.
What is discretionary spending?
If you lose your job unexpectedly, this fund helps you pay bills without going into debt.
What is a rainy-day fund?
This fixed-term deposit offers a higher interest rate than a savings account but penalizes early withdrawal.
What is a certificate of deposit (CD)?
This exchange-traded product is similar to a mutual fund but trades like a stock throughout the day.
What is an ETF (exchange-traded fund)?
What kind of growth does compound interest lead to?
What is exponential growth?
The difference between your total income and your total expenses is known as this.
What is your surplus or deficit?
Experts recommend that your emergency fund cover at least this many months of your average monthly expenses.
What is three months?
You can use this strategy to save money by cutting back on daily coffee purchases, for example.
What is reducing discretionary expenses?
Marc in the textbook invested 3,000 dollars in this index-tracking fund for balanced growth.
What is the S&P 500 mutual fund?
If you invest 200 dollars per month at an 8 percent annual return from age 18 to 65, you will accumulate approximately this amount.
What is over one million dollars?
When you categorize expenses as recurring or sporadic, you are creating this type of breakdown.
What is an expense classification system?
This type of account is ideal for an emergency fund because it offers liquidity and safety.
What is a savings account?
A loan made to the government that pays interest at maturity is known as this.
What is a bond/savings bond?
This type of fund focuses on newer companies and emerging technologies, offering higher growth potential but greater risk.
What is a high-growth or technology fund?
In a mathematical formula for interest, what does the "P" stand for?
What is the principal (original investment)?