Budgeting methods Flashcard

Front

What is envelope budgeting?

Back

A budgeting method where you have an envelope for each budgeted category and separate your income into each envelope.

Front

What type of expense is a cell phone bill?

Back

Fixed expense.

Front

If you won $1,000, how would you allocate it?

Back

50% for needs, 30% for wants, and 20% for savings.

Front

How can you modify the Envelope Method?

Back

By using separate bank accounts instead of physical envelopes.

Front

What is an example of a need?

Back

Medical care.

Front

What is a variable expense?

Back

An expense that can change from month to month, such as entertainment or dining out.

Front

What is a fixed expense?

Back

An expense that remains the same each month, such as rent or mortgage payments.

Front

What is the purpose of budgeting?

Back

To plan and control your finances by allocating income to various expenses.

Front

What is the 50/30/20 rule in budgeting?

Back

A guideline that suggests allocating 50% of income to needs, 30% to wants, and 20% to savings.

Front

What is the difference between needs and wants?

Back

Needs are essential for survival (like food and shelter), while wants are non-essential items (like luxury goods).