Understanding Financial Capabilities

What are fixed expenses?

• Fixed expenses are costs that only occur during peak seasons.

• Fixed expenses are regular, recurring costs that do not fluctuate with production or sales volume.

• Fixed expenses are optional costs that can be avoided.

• Fixed expenses are one-time costs that vary each month.

Give two examples of fixed expenses.

• Groceries

• Utilities

• Car Payments

• Rent, Insurance Premiums

How do fixed expenses differ from variable expenses?

• Variable expenses are predictable; fixed expenses are unpredictable.

• Fixed expenses vary with production levels; variable expenses remain the same.

• Fixed expenses are always higher than variable expenses.

• Fixed expenses are constant; variable expenses change with activity.

What are variable expenses?

• Costs that are always predictable and stable

• Expenses that are not related to consumption or usage

• Variable expenses are costs that vary in amount and frequency, depending on consumption or usage.

• Fixed expenses that remain constant each month

List three examples of variable expenses.

• car insurance

• rent payments

• mortgage payments

• groceries, entertainment, utility bills

How can you identify your variable expenses?

• Variable expenses are fixed costs like rent and utilities.

• Variable expenses are always the same every month.

• Variable expenses include savings and investments.

• Variable expenses are those that change month to month, such as groceries, dining, and entertainment.

What is take home pay?

• Take home pay is the amount spent on living expenses.

• Take home pay is the total salary before taxes.

• Take home pay is the net income received by an employee.

• Take home pay is the gross income before deductions.

How is take home pay calculated?

• Take home pay = Net income - Deductions

• Take home pay = Gross income + Taxes

• Take home pay = Gross income - Taxes + Bonuses

• Take home pay = Gross income - (Taxes + Other deductions)

What deductions are typically taken from gross income?

• Property taxes and utility bills

• Homeowners insurance premiums

• Credit card interest payments

• Federal and state taxes, Social Security and Medicare contributions, retirement plan contributions, health insurance premiums.

Define surplus in financial terms.

• Surplus is the amount of money spent on investments.

• Surplus is the excess of income over expenditures.

• Surplus refers to the total expenses incurred.

• Surplus is the total amount of debt owed.