Budgeting Basics Flashcards
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Questions and Answers

What is true regarding unexpected expenses?

They should be planned for.

What should be considered when setting a budget?

Needs, wants, and savings

What helps prepare for unexpected expenses?

Emergency Fund

What are the benefits of using a budget?

<p>Helps to keep track of the money received, helps to prioritize spending, helps to reach short- and long-term financial goals.</p> Signup and view all the answers

An unanticipated expense that will make it difficult to get by day-to-day would be a candidate for...

<p>emergency fund spending</p> Signup and view all the answers

What is a Short-Term Financial Goal?

<p>A goal set by a business or individual that is hoped to be achieved within the next year.</p> Signup and view all the answers

What is a Long-Term Financial Goal?

<p>Major purchases that require extensive saving to meet later in life.</p> Signup and view all the answers

What are ways to keep track of your budget?

<p>Notebook and Pencil, Envelope Method, Online Software or App, Spreadsheet Budget</p> Signup and view all the answers

What is the Notebook and Pencil method?

<p>Write out income and expenses in a notebook.</p> Signup and view all the answers

What is the Envelope Method?

<p>Allocate spending right before you get paid and split the money into envelopes.</p> Signup and view all the answers

What is the purpose of Online Software or App for budgeting?

<p>Create and track budgets on a device.</p> Signup and view all the answers

What is a Spreadsheet Budget?

<p>Similar to a notebook or paper budget but done on a computer.</p> Signup and view all the answers

What should you set up for effective saving?

<p>An automatic savings plan</p> Signup and view all the answers

What is a Savings Buddy?

<p>A friend who keeps you accountable for your savings goals.</p> Signup and view all the answers

What does Round Up mean in budgeting?

<p>Round all expenses up to budget more money.</p> Signup and view all the answers

What are Deal Apps used for?

<p>Help find discounts on regularly purchased items.</p> Signup and view all the answers

What is Fun Money?

<p>A weekly allowance for personal spending.</p> Signup and view all the answers

What does 'Cancel It' refer to in budgeting?

<p>Cancel unnecessary recurring expenses.</p> Signup and view all the answers

What does 'Eat In' mean in terms of budgeting?

<p>Plan meals ahead of time rather than going out for food.</p> Signup and view all the answers

What should one prioritize when creating a budget?

<p>Recurring Expenses</p> Signup and view all the answers

What are examples of things to consider when creating a budget?

<p>Charitable donations, entertainment expenses, and financial goals.</p> Signup and view all the answers

Which of the following is NOT true about emergency funds?

<p>False</p> Signup and view all the answers

Which of the following should you consider when setting a budget?

<p>Financial Goals, Needs, Wants, and Savings</p> Signup and view all the answers

An emergency fund should NOT be used for?

<p>A last minute school trip</p> Signup and view all the answers

What are the Benefits of using a budget?

<p>Helps to keep track of the money received, helps to prioritize spending, helps to reach short- and long-term financial goals.</p> Signup and view all the answers

What budgeting tip(s) would help you to stay on track financially?

<p>Find a friend with similar goals and hold each other accountable</p> Signup and view all the answers

Where should you look to find your current expenses when building your budget?

<p>Bank and Credit Statements</p> Signup and view all the answers

What is NOT true about unexpected expenses?

<p>False</p> Signup and view all the answers

The envelope method, notebook and pencil, and online software are all methods of ______.

<p>Tracking your spending.</p> Signup and view all the answers

Study Notes

Budgeting Basics

  • Unexpected expenses should be planned for using allocated "safe" money to avoid financial strain.
  • Key factors for setting a budget include needs, wants, and savings.

Emergency Preparedness

  • An Emergency Fund is essential for managing unexpected expenses and safeguarding day-to-day expenses.

Financial Goals

  • Short-term financial goals: expected to be achieved within one year (e.g., saving for a vacation).
  • Long-term financial goals: major purchases such as home ownership, education, retirement, and investments that require significant planning.

Budget Tracking Methods

  • Keeping track of the budget can be done using:
    • Notebook and Pencil: Record income and expenses manually.
    • Envelope Method: Allocate money into envelopes for specific categories to control spending.
    • Online Software or Apps: Automate tracking of expenses by linking accounts or logging them as they occur.
    • Spreadsheet Budget: Customize and update budget digitally without automatic linking.

Effective Budgeting Strategies

  • Implement an automatic savings plan to minimize impulse spending.
  • Involve a "Savings Buddy" to create accountability and motivation through friendly competition.
  • Use the "Round Up" method to budget slightly higher than expenses to set aside extra funds.
  • Explore deal apps for discounts on frequently purchased items to enhance savings.

Spending Mindfulness

  • Establish a weekly allowance labeled as "Fun Money" to enjoy leisure spending without guilt.
  • Regularly review and cancel any unnecessary subscriptions or autopay services.
  • Plan meals in advance to reduce dining out and encourage healthier eating choices.

Prioritization and Financial Planning

  • Prioritize new purchases over time rather than purchasing impulsively.
  • Find ways to save on transportation, such as carpooling or walking shorter distances.

Budgeting Considerations

  • When building a budget, list recurring expenses alongside needs.
  • Financial goals, charitable donations, and entertainment should also be factored in.
  • Emergency funds should not be used for non-essential expenses like last-minute trips.

Accountability & Monitoring

  • Peer accountability is effective; find a friend with similar financial goals for mutual support.
  • Review bank and credit statements to accurately assess current expenses and inform budgeting decisions.
  • Misconception: Having a budget does not eliminate unexpected expenses; they can still occur.

Summary

  • Effective budgeting combines preparation, tracking, and regular review to achieve financial goals and maintain control over spending.

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Description

Test your knowledge on budgeting concepts with these flashcards. Learn about unexpected expenses, budgeting considerations, and the importance of an emergency fund. Improve your financial literacy with key definitions and tips for effective budgeting.

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