Podcast
Questions and Answers
Net income is the amount you get paid before taxes.
Net income is the amount you get paid before taxes.
True (A)
Why is budgeting so important?
Why is budgeting so important?
It gives you control of your money and sets you up for financial success in the future.
How often should you create a budget?
How often should you create a budget?
monthly
What should you do if you overspend in one category of your budget?
What should you do if you overspend in one category of your budget?
Detailed categories on your budget will help you make better spending decisions.
Detailed categories on your budget will help you make better spending decisions.
The first priority in your budget should be _____.
The first priority in your budget should be _____.
What are the Four Walls?
What are the Four Walls?
If you have an irregular income, budgeting won't work for you.
If you have an irregular income, budgeting won't work for you.
Your monthly rent payment is an example of a variable expense.
Your monthly rent payment is an example of a variable expense.
What kind of money counts as income?
What kind of money counts as income?
The primary reason people don't budget is because they lack the behavior to stick to a budget.
The primary reason people don't budget is because they lack the behavior to stick to a budget.
How many months does it usually take for your budget to start working as a budget should?
How many months does it usually take for your budget to start working as a budget should?
Going to the movies is an example of what types of expenses?
Going to the movies is an example of what types of expenses?
What is a discretionary expense?
What is a discretionary expense?
Why is tracking your expenses throughout the month important?
Why is tracking your expenses throughout the month important?
A budget says what will happen with your money, while a cash-flow statement shows what already happened.
A budget says what will happen with your money, while a cash-flow statement shows what already happened.
What makes a budget a zero-based budget?
What makes a budget a zero-based budget?
If you really want to save money, you've got to...
If you really want to save money, you've got to...
You should budget in this order: giving, saving, and spending.
You should budget in this order: giving, saving, and spending.
Why do stores rarely advertise the full price of big purchases like smartphones?
Why do stores rarely advertise the full price of big purchases like smartphones?
The main reasons for saving your hard-earned money are...
The main reasons for saving your hard-earned money are...
The purpose of an emergency fund is to...
The purpose of an emergency fund is to...
The best way to build wealth is to start investing early. You should start investing money...
The best way to build wealth is to start investing early. You should start investing money...
Why do some accounts, like savings accounts at your local bank, earn interest?
Why do some accounts, like savings accounts at your local bank, earn interest?
One of the main reasons we build wealth is so that we can...
One of the main reasons we build wealth is so that we can...
The interest rate on a savings account determines...
The interest rate on a savings account determines...
_______ is a millionaire's best friend.
_______ is a millionaire's best friend.
The amount of interest charged on a debt but not yet collected is called...
The amount of interest charged on a debt but not yet collected is called...
The first step you should take when you want to make a large purchase is...
The first step you should take when you want to make a large purchase is...
Most millionaires make over $100,000 a year.
Most millionaires make over $100,000 a year.
Once you have a $500 emergency fund, you should...
Once you have a $500 emergency fund, you should...
Which two habits are the most important for building wealth and becoming a millionaire?
Which two habits are the most important for building wealth and becoming a millionaire?
What are the 3 questions to ask yourself before you spend your emergency fund?
What are the 3 questions to ask yourself before you spend your emergency fund?
Why is making a car payment a bad idea financially?
Why is making a car payment a bad idea financially?
Flashcards
Net Income
Net Income
Income remaining after taxes are deducted.
Budget
Budget
A plan that outlines how you'll manage your money, helping you control your spending and achieve your financial goals.
Monthly Budget
Monthly Budget
A monthly plan to manage your money effectively.
Reallocating Funds
Reallocating Funds
Adjusting your budget by moving money between categories to compensate for overspending in one area.
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Detailed Budget Categories
Detailed Budget Categories
Breakdown of categories to track spending and make informed financial decisions.
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Giving
Giving
The highest priority in your budget, often giving to charitable causes or fulfilling religious obligations.
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Four Walls
Four Walls
Essential expenses that keep you safe and alive: food, utilities, shelter, and transportation.
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Budgeting with Irregular Income
Budgeting with Irregular Income
Estimating income when it's inconsistent.
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Fixed Expenses
Fixed Expenses
Expenses that remain the same every month, such as rent.
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Variable Expenses
Variable Expenses
Expenses that fluctuate month to month, like electricity bills.
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Income
Income
Any money you receive, including gifts, that contributes to your income.
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Lack of Budgeting Discipline
Lack of Budgeting Discipline
The primary reason people don't budget, indicating a lack of financial discipline.
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Budget Effectiveness Timeframe
Budget Effectiveness Timeframe
The time it takes for a budget to become a habit and function effectively.
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Discretionary Expenses
Discretionary Expenses
Expenses that are not essential for survival, such as entertainment and dining out.
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Tracking Expenses
Tracking Expenses
Tracking every dollar you spend to ensure you're sticking to your budget.
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Budget
Budget
A plan outlining how you'll spend your money.
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Cash Flow Statement
Cash Flow Statement
A review of your past financial transactions.
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Zero-Based Budget
Zero-Based Budget
A budgeting method where every dollar is allocated to a specific category.
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Saving
Saving
Living below your means and putting money aside for future financial security.
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Budgeting Order
Budgeting Order
The order of financial priorities: give, save, then spend.
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Monthly Payments
Monthly Payments
Stores often highlight only monthly payments to make purchases seem more affordable.
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Reasons for Saving
Reasons for Saving
The primary reasons for saving: to cover unexpected expenses, make large purchases, and build long-term wealth.
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Emergency Fund
Emergency Fund
A fund set aside to cover unexpected expenses.
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Emergency Fund Goal
Emergency Fund Goal
The amount of money you need saved to cover 3-6 months of essential expenses.
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Interest on Savings
Interest on Savings
The money earned by banks on deposits, which is paid out to depositors.
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Wealth Building
Wealth Building
Creating wealth for future generations and to help people in need.
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Interest Rate Impact
Interest Rate Impact
The rate at which your savings grow over time.
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Compound Growth
Compound Growth
The exponential growth of savings due to interest compounding.
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Accrued Interest
Accrued Interest
Unpaid interest accumulated on debt.
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Planning Large Purchases
Planning Large Purchases
Planning for large purchases by estimating savings needed and timelines.
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Millionaire Income
Millionaire Income
Many millionaires earn less than $100,000 per year.
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Initial Emergency Fund
Initial Emergency Fund
Maintain a $500 emergency fund until a real emergency occurs.
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Emergency Fund Decision
Emergency Fund Decision
Key questions to determine if an emergency situation justifies using your emergency fund.
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Car Payments
Car Payments
Car payments can be financially detrimental due to vehicle depreciation.
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Budgeting Basics
- Net income is income after taxes.
- Budgeting empowers financial control and future success.
- A budget should be created monthly for effective financial management.
- If overspending occurs in one category, adjust by reallocating funds from other categories.
- Detailed budget categories improve spending decisions.
Priorities and Essentials
- First budget priority: giving.
- Four Walls of budgeting: food, utilities, shelter, transportation.
- Budgeting can succeed even with irregular income through estimation.
Income and Expenses
- Rent is a fixed expense; variable expenses fluctuate, such as electricity.
- All received money, including gifts, counts as income.
- Lack of budgeting discipline is a primary reason people do not budget.
Budget Duration and Understanding
- Typically, it takes three months for a budget to function effectively.
- Discretionary expenses are non-essential, such as entertainment costs.
- Tracking expenses is vital for assessing budget adherence.
Budget Types and Principles
- A budget describes planned spending, while a cash-flow statement reviews past transactions.
- A zero-based budget allocates every dollar to a category.
- Saving requires living below your means for future financial security.
Investment and Wealth Building
- Budgeting order: give, save, spend.
- Stores often advertise only monthly payments to enhance perceived affordability.
- Main reasons for saving: emergencies, large purchases, wealth building.
Emergency Funds and Savings
- Emergency funds cover unexpected expenses and prevent debt accumulation.
- Start investing after college, being debt-free, and saving 3-6 months of living expenses.
- Savings accounts earn interest because banks utilize deposited funds.
Wealth Accumulation
- Wealth building is intended to help others in need.
- Interest rates on savings accounts impact growth speed over time.
- Compound growth significantly benefits long-term savings.
Financial Management
- Accrued interest refers to unpaid interest on debt.
- Plan large purchases by estimating required savings and timeframes.
- Many millionaires earn less than $100,000 annually.
Emergency Fund Utilization
- Maintain a $500 emergency fund until a real emergency arises.
- Key questions before using emergency funds: Is it unexpected? Is it necessary? Is it urgent?
- Car payments can be financially detrimental due to depreciation.
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