Ramsey Classroom Chapter 2 (Budgeting Basics)

A budget is a _______ for your money.

plan

Your budget gives you __________ to spend.

freedom

Money _____ in two ways: in and out.

flows

Money flows out through giving, saving, and _________.

spending

95% of people agree that budgeting is __________.

important

Only _______ of people do a budget every month.

35%

Budget

a written plan for giving, saving, and spending

The first component of a budget is _________.

income

The second component is ________.

giving

The third component is ________.

saving

The fourth component is ________.

spending

The way you break up your ____________ is up to you.

categories

Your income, savings, and ________ can also have categories.

giving

Income

money received for work, as a gift, or through investments

Fixed Expense

expenses that remains the same from month to month

Variable Expense

expenses that varies in dollar amount from month to month but that you can expect to have every month

Intermittent Expense

expense that occurs at various times throughout the year and tends to be in large, lump sums

Discretionary (Nonessential) Expense

expense for things you don't need

A zero-based budget is when your income minus your giving, saving, and spending equals ________.

zero

Prioritize your _________ : shelter, utilities, transportation, and food.

four walls

A zero-based budget does not mean zero dollars in your _________ account.

checking

The best kind of budget is a ___________ budget.

zero-based

Make sure you have a miscellaneous __________.

category

Use a budgeting app that works for _______.

you

Net Income

what a person earns after payroll taxes and other deductions are taken out; often referred to as take-home pay

Gross Income

the amount you earn before taxes and other payroll deductions

After you make a budget, you need to ________ every expense.

track

Keeping track of your expenses will help you _____ your budget.

adjust

A budget is never going to be a _________ process.

perfect

One of the best ways to track your expenses is the _________ system.

envelope

When you use _______, you end up spending less.

cash

Don't underestimate the emotional _________ you get when using cash.

punch

Cash-Flow Statement

a record that summarizes all of the income and spending over a certain time period

Irregular Income

income that comes in at different amounts or at different times, or both

Commission

earnings based on a percentage of the sales made

7 Baby Steps

1. Save a $1,000 emergency fund

2. Pay off all your debt (except the mortgage) using the debt snowball

3. Save a 3-6 months emergency fund

4. Invest 15% of your income for retirement

5. Save for your children's education

6. Pay off the house early

7. Build wealth and give

What should you do with every dollar of your income?

Give it a name

You will be inclined to budget one way or another way based on your money _________.

personality

Ask a parent or find a ________ to help keep you accountable.

friend

Be ________ with yourself about your spender or saver tendencies.

honest

Taxes and withholdings impact your _____ , which is the amount of money you take home on your paycheck.

net income

The cost of groceries and gas is considered a ______.

variable expense

To budget with an _____ , prioritize expenses from most to least important so your most important expenses are covered first.

irregular income

A _________ needs to be evaluated in light of your other expense for the month.

discretionary expense

A __________ stays the same from month to month.

fixed expense

A ______ should account for fixed, variable, intermittent, and discretionary expenses based on income.

zero-based budget

A budget doesn't tell you lot to spend. A budget actually...

gives you permission to spend.

The envelope system is especially helpful for expenses like...

food, gas, entertainment, and shopping.

The 3 priorities in your budget, after listing income, are...

giving, saving, spending.

Specific categories are important to consider when creating a budget so you can...

know exactly where you money comes from and where you plan to spend it.

What's it called when you make money on the percentage of the total sales you make?

commission

Which of the following is not a type of discretionary expense?

depreciation

What's your biggest wealth-building tool?

income

If you approach money with a generous spirit, you'll be....

more grateful

What will tracking expense help you do?

stick to a budget, catch errors, and make adjustments

When you're creating your monthly budget, what's the first priority under expenses?

giving