Foundations in Personal Finance: Chapter 2 - Budgeting Basics
Intermittent Expense
Expense that occurs at various times throughout the year and tends to be in large, lump sums.
Variable Expense
Expense that varies in dollar amount from month to month, but that you can expect to have every month.
generous
Find creative ways to be _______________ with your time and money.
- Write it all down - Prioritize your expenses. - Assign money to the expenses as far down as you can go.
How do you budget with an irregular income?
over $1,800
How much does the average family spend over a year on clothing?
$370 groceries $290 dining out
How much does the average household spend on groceries and dining out each month?
more grateful
If you approach money with a generous spirit, you'll be...?
adjust
Keeping track of your expenses will help you _____________ your budget.
category
Make sure you have a miscellaneous ______________.
flows
Money ________ in two ways; in and out
giving, saving, and spending
Money flows out in three ways: ________________________________
Income
Money received for work, as a gift, or through investments
envelope
One of the best ways to track your expenses is the ________________ system.
35%
Only __________ of people do a budget every month.
four walls
Prioritize your ______________: shelter, utilities, transportation, and food.
breakdown income and spending
Specific categories are important to consider when creating a budget so you can...?
Net Income
Taxes and withholdings impact your _________________, which is the amount of money you take home on your paycheck.
zero-based
The best kind of budget is a _____________ budget.
variable expense
The cost of groceries and gas is considered a(n)
food, gas, entertainment, and shopping
The envelope system is especially helpful for expenses like...?
diaster
The first month you do your budget will be a _________________, adn that's okay.
giving, saving, spending
The three priorities in your budget, after listing income, are....?
categories
The way you break up your _________________ is up to you.
irregular income
To budget with a(n) ________________, prioritize expenses from most to least important so your most important expenses are covered first.
you
Use a budgeting app that works for...
Net Income
What a person earns after payroll taxes and other deductions are taken out; often referred to as take-home pay.
- income - giving - saving - spending
What are the four components of a budget?
- groceries - restaurants - gas - entertainment - personal
What are the most common budget categories for using cash?
Commission
What is it called when you make money on the percentage of the total sales you make?
93%
What percentage of millionaires stick to their budget?
-Stick to a budget -Catch errors -Make adjustments
What will tracking expenses help you do?
- a cash-flow plan that assigns an expense to every dollar of your income; the goal is for the total income minus the total expenses to equal zero. - Give every dollar a job to make sure you have enough for bills, shopping, etc. - Shows you're being intentional about reaching goals set in financial plan. - Makes the most of every dollar you have.
What's a zero-based budget, and why is it important?
income
What's your biggest wealth-building tool?
faster
When budgeting becomes a habit in your life it will become easier and _____________
cash
When you use __________, you end up spending less.
Giving
When you're creating your monthly budget, what's the first priority under "expenses"?
Depreciation
Which of the following is not a type of discretionary expense? - fixed - intermittent - variable - depreciation
personality
You will be inclined to budget one way or another way based on your money ________________
freedom
Your budget gives you _________________ to spend.
giving
Your income, savings, and _______________ can also have categories.
Share
____________ your budget with someone you trust.
Zero-Based Budget
a cash-flow plan that assigns an expense to every dollar of your income; the goal is for the total income minus the total expenses to equal zero.
Cash-Flow Statement
a record that summarizes all of the income and outgo (spending) over a certain time period.
Budget
a written plan for giving, saving, and spending.
Commission
earnings based on a percentage of the sales made.
movie tickets, eating out, music subscriptions
examples of discretionary expenses?
rent, mortgage, car payments.
examples of fixed expenses?
car insurance premiums, vet bills, yearbooks.
examples of intermittent expenses?
groceries, gas, clothing.
examples of variable expenses?
Fixed Expense
expense that remains the same from month to month
Irregular Income
income that comes in at different amounts or at different times, or both
important
95% of people agree that budgeting is __________________?
gives you freedom to spend
A budget doesn't tell you not to spend. A budget actually....?
plan
A budget is a ___________ for your money.
perfect
A budget is never going to be a _______________ process.
checkings
A zero-based budget does not mean zero dollars in your ___________ account.
zero
A zero-based budget is when your income minus your giving, saving, and spending equals...?
Discretionary Expense
A(n) ________________________ needs to be evaluated in light of your other expenses fro the month.
Fixed expense
A(n) _________________________ stays the same from month to month.
Zero-based budget
A(n) __________________________ should account for fixed, variable, intermittent, and discretionary expenses based on income.
track
After you make a budget, you need to ____________ every expense.
friend
Ask a parent or find a ____________ to help keep you accountable.
honest
Be __________ with yourself about your spender or saver tendencies.
punch
Don't underestimate the emotional ___________ you get when using cash.
different
Every month is going to be ________________
Discretionary Expense
Expense for things you don't need
three
Give your budget __________ months to start working.
more than 90%
The average American household spends ____________ of their annual income.
month
You need to do a budget every single ____________
Gross Income
the amount you earn before taxes and other payroll deductions.
