UGBA 135 Class 2 - Budgeting & Inflation

These flashcards cover key concepts from the UGBA 135 class regarding budgeting, inflation, and financial management strategies.

What is the Consumer Price Index (CPI)?

A measure comparing the cost of a basket of goods across different years.

What does the Bureau of Economic Analysis (BEA) calculate?

Personal Consumption Expenditures (PCE) as an alternative measure of inflation.

What can $4.00 from 1969 be roughly equivalent to today?

About $27 in purchasing power.

What is the Rule of 72?

A formula to estimate how long it will take to double an investment based on a fixed annual rate of return.

How long would it take for money to double at a 12% rate of return?

6 years (calculated as 72 divided by 12).

What does a 'SMART' financial goal entail?

Specific, Measurable, Achievable, Relevant, Time-bound.

What should a good budgeting approach align with?

Your values and life goals.

How often are budgets typically done?

Monthly.

What is the importance of paying yourself first in financial management?

It ensures saving becomes a priority and is treated like a fixed expense.

What type of account should you use for emergency savings?

A High-Yield Savings Account (HYS) that earns at least 3.60% interest.

What is recommended for the size of an emergency fund?

3-6 months of fixed expenses.

What do services/apps that monitor accounts and auto-deduct savings help achieve?

To streamline the saving process and increase consistent savings.