Budgeting
What is a budget?
A plan for how you will spend and save your money.
True or False: Saving money helps prepare for emergencies
True
What does it mean to borrow money?
Receiving money that must be paid back, usually with interest.
What is investing?
Putting money into something with the goal of growing it over time.
If you earn $400 each week and spend $275, how much money do you have left?
$125
If you save $25 every week, how much will you save after 12 weeks?
$300
True or False: Credit cards usually charge interest if you don't pay the full balance.
True
What is compound interest?
Interest earned on both the original money and the interest already earned.
You earn $2,000 each month. If you want to save 20%, how much should you save?
$400
You save $80 each month. How much will you have after one year?
$960
You borrow $100 and repay $110. How much interest did you pay?
$10
You invest $1,000 at 5% annual interest. About how much interest will you earn after one year?
$50
Your monthly expenses are:
How much do you spend each month?
$1,450
If you save 15% of a $600 paycheck, how much do you save?
$90
You buy a laptop for $900 using a credit card. If you pay it off immediately, will you usually pay interest?
No (assuming the full balance is paid by the due date.)
You invest $2,000 at 10% annual interest. Approximately how much money will you have after one year?
$2,200
You earn $3,000 each month. Your expenses total $2,450. What percentage of your income do you have left?
Remaining = $550
$550 ÷ $3,000 × 100 = 18.3%
You have $500 in savings. You add $50 every month for 10 months. How much money will you have?
$1,000
You take out a $5,000 loan and repay $5,800 over time. How much did you pay in interest?
$800
Two people each invest $100 per month. Person A starts at age 20, while Person B starts at age 30. Assuming the same rate of return, who is likely to have more money at retirement?
Person A, because their money has more time to grow through compound interest