Budgeting methods Flashcard

Front

What is the difference between fixed and variable expenses?

Back

Fixed expenses remain constant each month (e.g., rent), while variable expenses can change (e.g., groceries).

Front

Categorize the following expense: School supplies.

Back

Variable expense.

Front

What percentage of a $1,000 windfall should ideally be saved according to a balanced budget?

Back

20%.

Front

What is the envelope method in budgeting?

Back

A budgeting method where cash is divided into envelopes for different spending categories.

Front

How can the envelope method be modified for modern use?

Back

By using separate bank accounts for different budget categories.

Front

What are some common methods for tracking spending?

Back

Envelope method, notebook and pencil, online budgeting software.

Front

Why is it important to categorize expenses?

Back

It helps in understanding spending habits and managing a budget effectively.

Front

What is a common allocation strategy for a budget?

Back

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

Front

What is the purpose of budgeting?

Back

To plan and control financial resources effectively.

Front

What is a fixed expense? Give an example.

Back

An expense that does not change, such as rent or mortgage payments.