Unit 2 – Budgeting Vocabulary

Vocabulary flashcards covering key budgeting terms from Unit 2.

50/30/20 Budget

A budgeting rule in which 50% of income goes to necessities, 20% to saving and debt repayment, and 30% to flexible spending.

Budget

A plan for expected income and how it will be used to meet expected expenses over a set time period.

Cash Envelope Budget

Method where cash is divided into labeled envelopes for each budget category, and spending is limited to the cash in each envelope.

Cost of Living

The amount of money needed for basic expenses—housing, food, taxes, healthcare—often used to compare cities.

Deficit

When expenses exceed income.

Down Payment

The upfront portion of a purchase price, such as for a car or house; the remainder is usually financed with a loan.

Expenses

Items or services you pay for, such as rent, groceries, entertainment, and bills.

Emergency Fund

Money set aside for unexpected expenses or loss of income.

Fixed Expense

A cost that occurs at regular intervals and remains the same amount, e.g., monthly rent.

Gross Pay

Total earnings before any deductions.

Needs

Essential expenses required to live and function.

Net Pay

Earnings after payroll taxes and other deductions; also called take-home pay.

Pay Yourself First

Strategy of saving a designated amount from each paycheck before spending on anything else.

Public Transportation

Buses, trains, subways, and other transit systems that charge set fares and follow fixed routes available to the public.

Residential Lease

A contract between tenant and landlord outlining terms and costs for renting property.

Salary

A fixed amount paid over a period regardless of hours worked.

Surplus

When income exceeds expenses, leaving leftover money.

Unit Price

The cost per single item or measurement, allowing easy comparison between similar products.

Utilities

Basic services—such as water, electricity, and gas—needed to keep a home or business functioning.

Variable Expense

A cost that changes in amount or occurs irregularly, e.g., utility bills.

Wants

Expenses that improve comfort or enjoyment but are not essential.

Zero-Based Budget

A budgeting method assigning every dollar of income a specific purpose so that no money is left unallocated.