Budgeting 101
List the four walls. Why are they important?
Food, Utilities, Transportation, and Shelter. They are our essentials, they would be the first thing that we use for our budget.
What is the leftover method?
Making supper each night and eating the leftovers for lunch to save on groceries.
What is the difference between a checking and savings account?
Checking account is for every day spending and is attached with a debit card. Savings account is for your money to sit for a bit like an emergency fund or large purchase you are saving for.
What is the key difference between a traditional savings account and an online high yield savings account?
Online high yield will be earning higher interest than the traditional savings account.
What is the first baby step? Give an example.
Save $1,000 for an emergency fund. Car breaks down, fall down stairs, windshield cracks, fridge breaks, roof is damaged, etc.
Difference between net and gross income. In addition, also give what else they could be called.
Gross it he amount before taxes and deductions are taken out (grand pay). Net is after taxes and deductions are taken out. (Take-home pay)
What are three benefits of meal planning/grocery shopping?
1. Saves time by planning ahead.
2. Easier to make a grocery list.
3. You end up eating healthier.
What is the difference between a routing number and an account number?
Routing - specific to your bank
Account - specific to your bank account
Describe a certificate of deposit (CD).
Earns high interest than a traditional savings account, but your money is "locked" for a certain period of time.
What is baby step number 2 and 3?
2 - Get out of debt and stay out of debt except house
3 - Save 3-6 months of expenses
Describe the 50/20/30 rule. Give an example of each category.
50% - Expenses (utilities/rent) 20% Savings/Debt (emergency fund/student loans) 30% Wants (entertainment/eating out)
It costs $20 for 5 rolls of paper towels. What is the cost per unit per roll of paper towels?
$4
What is the minimum account balance mean? What happens when you go below it?
The least amount of money you can have in your account without paying a fee. If you go below it, you will be charged a fee from the bank.
Describe a money market account. What makes this better than a traditional savings account.
Usually earns higher interest and you are able to withdrawal more often than a traditional savings account.
What is baby step number 4?
Invest 15% of your monthly income for retirement.
Give an example and the timeline of each of the timeline goals. Short-term, Medium-term, Long-Term.
Short-Term (0-1 years) laptop for college
Medium-Term (2-5 years) car
Long-Term (5+ years) house
What is the meal prepping method?
Make a bunch of meals at the beginning of the week, eat them throughout the week to save on groceries.
Difference between a deposit and withdrawal
Deposit - money going into your account
Withdrawal - money going out of your account
I have 10,000 I will NOT need for about 3 years. What are my 2 best options when it comes to choosing a savings account? Hint: I do not have my $1,000 emergency fund saved anywhere yet. Could I put that elsewhere?
1. Keep $1,000 in a traditional savings account, and put the remaining into an online high yield savings account.
2. Keep $1,000 in a traditional savings account, and put the remaining in a 3 year CD.
What is baby step number 5 & 6?
5 is save for college for your children. 6 is pay off your house.
Describe a 0 based budgeting rule. Why is this important? Give at least one thing I shouldn't do when I use the 0 based budgeting rule.
You want every dollar to have a place. This does NOT mean that you will get to $0 in your checking account, but you are at least giving every dollar a place for the next month.
If I spend too much money on groceries, what are some things that I can do to save on money in the grocery store or outside the grocery store? (List at least 3)
1. Online Pickup/Delivery
2. Stick to my list on my phone
3. Stick to the outside perimeter of the grocery store (don't go into the aisles!)
4. Meal plan ahead of time (make a recipe list)
What are cashiers checks for? Who writes them?
Written by your bank and ensures that only 1 person/company can deposit it. Typically will be used for larger dollar amounts like loan deposits/down payments.
If a bank is a member of the FDIC, what does that mean? Give the amount as well.
The bank is insured up to to $250,000 per account per depositor to keep your money safe in the case of an emergency.
What is the last baby step? Why is this important?
Build wealth and give. Wealth can enable us to provide and share resources (emotional and financial) with those we care about.