personal finance lap 2

majority of americans think budgeting is important, but only about ___ of american actually make a budget

35%

How often should you budget

monthly

How many months does it usually take for your budget to start working as a budget?

three months

A common misconception is that budgeting will keep you from having fun, when in reality, a budget…

gives you permission to spend

What does a budget show you?

How much money do you plan to come in and go out during the month

Shows what your income is (money coming in) and what your expenses are (money going out) for a set period of time

What are the four components of a budget

Income, giving, saving, spending

How many categories should you have in your budget

No limit, use as many as you need to keep your budget accurate

Detailed ___ on your budget will help you make better spending decisions

cetgories

What are the 4 walls? What priority should those be in your budget

Transportation, food, shelter, utilities

They should come after giving and saving, but before all other categories in your budget

What are the 4 expense types? Give an example of each.

Fixed: remains the same month to month (rent)

Variable: varies in dollar amount from month to month, but you can expect to have every month (utilities)

Intermittent: Occurs at various times throughout the year, tends to be in large, lump sums (insurance, new tires)

Discretionary: things you do not need, just want (eating out, streaming services)

• Your money personality can affect your ___ towards budgeting 

attitude

Nearly half of american feel stress and anxiety about the amount of ___ they have

personal debt

A budget says __ __ __ with your money, while a cash-flow statement shows __ __ __

What will happen 

What already happened

Why is tracking your expenses throughout the month important?

It gives you insight into whether you are sticking to the budget you set

What are some key components of successful budgeting

Creating a budget 

tracking your spending 

Finding a system that works for you 

Adjusting your budget depending on how the month went 

Sticking to your budget

When is the right time to start creating and living by a budget

RIGHT NOW! 

Just because you are in high school and may not have much income, it is never too early to start putting these skills into practice and strengthening them for your future

What is commission? What type of income is this and an example of?

Commission is money you make based on the percentage of total sales 

irregular income

example:

 Straight Commission:

A salesperson earns only a percentage of their sales (A sales rep sells a product for $1,000 and receives a 10% commission, earning $100)

What kind of money counts as income

All money that you receive, including money from your job and gifts like birthday money

What should you do if you overspend in one category of your budget?

Adjust your budget by removing money from other spending categories

Describe irregular income and give and example

• Irregular income fluctuates from month to month; it is not a fixed amount every two weeks or month 

• Ex: commission-based jobs, seasonal retail jobs, grass cutting business, side hustles

What is the best way to budget

The way that works best for you

The way that you will stick to

What is a good way to make sure you're creating a budget that's realistic

Check your calendar so you can plan for upcoming monthly expenses

The main reason people do not budget is that they lack the behavior to stick to a budget

true

What is the envelope system

A method of budgeting that uses envelopes labeled with specific budget categories for your cash

What makes a budget a zero-based budget

When your income minus your total expenses (giving, saving, spending) equals zero

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 an

Variable expense

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

Irregular income

An ___ needs to be evaluated in light of your other expenses for the month

Discretionary expense

An ___ stays the same from month to month

Fixed expense

An ___ should account for fixed, variable, intermittent, and discretionary expenses based on income

Zero-based budget

A budget doesn’t tell you not to spend. A budget actually

Gives you permission to spend

The envelope system is especially helpful for expenses like

Groceries, restaurants, gas, and entertainment

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

Giving, spending, saving

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

Break down your income and spending

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

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

Giving

If you approach money with a generous spirit, you’ll be

More grateful

What will tracking expenses help you do

Stick to a budget, catch errors, make adjustments

Whats a zero based budget and why is it important

It is a budget where you use each dollar that you make. You get your monthly income and then you separate it into specific categories for saving, spending, and giving, and you add money into each of these categories until your income minus your expenses equals zero.  It is important because it gives you an exact plan for how to spend your money, so that you are spending your money in the most efficient way.

Budget

A written plan for giving, saving, and spending

Variable expense

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

Zero-based budget

• A cash-flow plan that assigns an expense to every dollar of your income; the goal is for the total income minus the total expenses to equal zero

Cash-flow statement

A record that summarizes all of the income and outgo (spending) over a certain period of time

Income

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

Intermittent expense

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

Net income

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

Irregular income

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

Fixed expense

Expense that remains the same from month to month

Discretionary expense

Expense for things you do not need

Gross income

The amount you earn before taxes and other payroll deductions

Commission

Earnings based on a percentage of the sales made