Budgeting Basics
What is a budget?
A plan for how to spend and save money
What do we call the amount of your paycheck after taxes?
Net income (Take-home pay)
Putting money in different investments to manage risk is called?
Diversification
What government program gives income to retired workers?
Social Security
Groceries and entertainment are examples of...?
Variable expenses
If you spend less than you budgeted, you are...
Under budget
What do we call the amount before taxes?
Gross income
What is the benefit of holding an investment longer than a year?
Lower capital gains taxes
Your Social Security benefit depends on what two factors?
Your income and years worked
What kind of tax makes cigarettes more expensive?
Sin tax
Rent and car payments are examples of what type of expenses?
Fixed expenses
Taxes and benefits are known as...?
Withholdings
What kind of account do employers often match for retirement?
401(k)
What is a financial plan?
A written roadmap for managing money, goals, and emergencies
Jane saw a cereal on TV and asked her mom to buy it. This is an example of...?
Impulse buying due to advertising
What is a well-stated financial goal?
One that is specific, measurable, and time-bound
The term for money left after paying bills and taxes is...?
Disposable income
A savings account is best for what kind of goals?
Short-term goals
What does a good financial plan include?
Budgeting, saving, investing, managing debt, planning for retirement
What's the best response if you rely on credit cards for food and rent?
Adjust your budget and reduce spending
What should you do if your expenses are more than your income?
Cut back spending or increase income
What does a lower debt-to-income ratio mean?
You have less debt compared to your assets or income
What is a financial consultant or stockbroker’s job?
Help people invest and plan finances
Why start saving for retirement early?
More time = more growth through interest or investment returns
What tool can help track where your money goes each month?
A written budget or budgeting app