Dave Ramsey Chapter 2 & 3 Flashcards

Income remaining after taxes are deducted.

A plan that outlines how you'll manage your money, helping you control your spending and achieve your financial goals.

A monthly plan to manage your money effectively.

Adjusting your budget by moving money between categories to compensate for overspending in one area.

Breakdown of categories to track spending and make informed financial decisions.

The highest priority in your budget, often giving to charitable causes or fulfilling religious obligations.

Essential expenses that keep you safe and alive: food, utilities, shelter, and transportation.

Estimating income when it's inconsistent.

Expenses that remain the same every month, such as rent.

Expenses that fluctuate month to month, like electricity bills.

Any money you receive, including gifts, that contributes to your income.

The primary reason people don't budget, indicating a lack of financial discipline.

The time it takes for a budget to become a habit and function effectively.

Expenses that are not essential for survival, such as entertainment and dining out.

Tracking every dollar you spend to ensure you're sticking to your budget.

A plan outlining how you'll spend your money.

A review of your past financial transactions.

A budgeting method where every dollar is allocated to a specific category.

Living below your means and putting money aside for future financial security.

The order of financial priorities: give, save, then spend.

Stores often highlight only monthly payments to make purchases seem more affordable.

The primary reasons for saving: to cover unexpected expenses, make large purchases, and build long-term wealth.

A fund set aside to cover unexpected expenses.

The amount of money you need saved to cover 3-6 months of essential expenses.

The money earned by banks on deposits, which is paid out to depositors.

Creating wealth for future generations and to help people in need.

The rate at which your savings grow over time.

The exponential growth of savings due to interest compounding.

Unpaid interest accumulated on debt.

Planning for large purchases by estimating savings needed and timelines.

Many millionaires earn less than $100,000 per year.

Maintain a $500 emergency fund until a real emergency occurs.

Key questions to determine if an emergency situation justifies using your emergency fund.

Car payments can be financially detrimental due to vehicle depreciation.