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Questions and Answers
Why might variable expenses change a great deal at different times of year?
Heating and cooling costs might vary considerably.
A short-term financial goal might include saving for?
a piece of furniture.
To create a balanced budget, one must make sure to?
spend less than or equal to income.
What is the simplest change that can be made to the budget to produce more savings next month?
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From what part of income should someone take savings?
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An expense that is constant each month is called a __ expense.
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Which is an example of an income deduction?
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What effect would a tax increase have on income?
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If Tokuji's monthly net income will increase to $650 and he increases his savings to $110 a month, how much can he increase his discretionary spending?
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Why is net income lower than gross income?
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Study Notes
Variable Expenses
- Fluctuations in heating and cooling costs can cause significant variations in variable expenses throughout the year.
Short-term Financial Goals
- Saving for items like furniture serves as a common example of a short-term financial goal.
Balanced Budget
- A balanced budget requires total spending to be less than or equal to total income.
Increasing Savings
- To enhance savings in a monthly budget, the simplest adjustment is reducing food expenses.
Savings Source
- Savings should ideally come from what would otherwise be discretionary income.
Fixed Expenses
- An expense that remains constant each month is categorized as a fixed expense.
Income Deductions
- A typical example of an income deduction does not include an unexpected salary cut.
Impact of Tax Increases
- Tax increases do not change gross income levels, though they affect net income.
Discretionary Spending Increase
- If Tokuji's net income rises to $650 and he saves $110 monthly, he can increase discretionary spending by $20.
Net vs. Gross Income
- Net income is lower than gross income primarily due to withholdings and deductions.
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Description
Test your knowledge of budgeting concepts with these flashcards. Each card presents a key term or question related to budgeting and personal finance. Perfect for those looking to improve their financial literacy and budgeting skills.
