8 Questions
Welcome back to ______ finance
whiteboard
The poll is asking what kind of videos you want to see from this ______
channel
50% of the pie represents your ______
needs
A want is something that causes a minor ______ in your life
inconvenience
Saving for retirement is one of the things that most Americans will be suffering from in 20-30 years because a lot of them are just not focusing on ______ savings
retirement
If you have credit cards, student loans, or other debts, you should use 20% of your income to ______ them
pay off
An emergency fund should be 6 to 12 months of living expenses, which for example could be $2,000 a month for your entire family, so you need to save about 12 to 24 ______ in your emergency fund
000
Creating a monthly budget and knowing where every single one of your after-tax dollars is going can be a ______ experience
surprising
Study Notes
The 50/30/20 Rule
- The 50/30/20 rule is a budgeting guideline that allocates 50% of net income towards needs, 30% towards wants, and 20% towards savings and debt repayment.
Needs (50%)
- Needs include essential expenses that cannot be avoided, such as:
- Groceries
- Housing (mortgage or rent)
- Insurance (health, life, etc.)
- Utilities (electricity, water, etc.)
- A need is defined as something that would greatly inconvenience you or is necessary for survival.
Wants (30%)
- Wants include discretionary expenses that improve the quality of life, but are not essential, such as:
- Shopping (clothing, accessories, etc.)
- Dining out
- Hobbies (gardening, video editing, etc.)
- A want is defined as something that is not necessary for survival, but enhances the quality of life.
Savings and Debt Repayment (20%)
- The 20% allocated towards savings and debt repayment should be used for:
- Emergency fund (6-12 months' worth of living expenses)
- Paying off debts (credit cards, student loans, etc.)
- Retirement savings
- This category is essential for long-term financial stability and security.
Master the 50 30 20 Rule: Take this Quiz to Learn How to Manage Your Money and Build Wealth!
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