Budgeting and Financial Literacy 6.2.2

What is a budget?

• A plan for unexpected expenses

• A plan for your expected income and how you will use it

• A list of all your debts

• A method to avoid taxes

What does budgeting involve?

• Spending all your money immediately

• Calculating how much money you must earn or save during a specific time period

• Ignoring your expenses

• Only saving money without spending

What is a cash envelope budget?

• A digital budgeting tool

• A financial plan where money for spending is taken out in cash and placed in labeled envelopes

• A method to invest in stocks

• A way to avoid paying taxes

What is a deduction?

• An increase in your paycheck

• Any items subtracted from your paycheck

• A bonus added to your salary

• A type of investment

What is a deficit?

• When your income exceeds your expenses

• When your expenses exceed your income

• When you have no expenses

• When you have no income

What does a 50/30/20 budget allocate?

• 50% to savings, 30% to wants, 20% to needs

• 50% to needs, 30% to wants, 20% to savings and debt repayment

• 50% to wants, 30% to savings, 20% to needs

• 50% to debt repayment, 30% to savings, 20% to wants

What is a fixed expense?

• A cost that changes every month

• A cost that can be expected at regular intervals and remains the same amount

• A cost that is unpredictable

• A cost that is only paid once

What is income?

• Money that is borrowed from a bank

• Money that is earned from work, investments, business, etc.

• Money that is given as a gift

• Money that is found unexpectedly

What are needs?

• Purchases that are optional

• Purchases a person must have to live or succeed

• Purchases that are only for entertainment

• Purchases that can be delayed indefinitely

What is net pay?

• Total earnings before any deductions

• Total earnings after payroll taxes and deductions

• Total savings in a bank account

• Total expenses for a month