Budgeting Practice Flashcard

Front

What is Zero-based budgeting?

Back

A budgeting method where every dollar of income is allocated to expenses or savings, resulting in a budget that equals zero at the end of the period.

Front

What is the primary benefit of using a budget?

Back

It helps you track and manage your expenses.

Front

How much of a $6000 monthly income is allocated to wants using the 50/30/20 budgeting method?

Back

$1800.

Front

What is a benefit of salaried work compared to hourly work?

Back

Consistent monthly income.

Front

How do you calculate the unit price of an item?

Back

Divide the total price by the number of units (e.g., price per ounce).

Front

What is the 50/30/20 budgeting rule?

Back

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

Front

What is the cash envelope system?

Back

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

Front

What does it mean to track expenses?

Back

Recording all spending to understand where money goes and to identify areas for improvement.

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

Why is it important to have an emergency fund?

Back

To cover unexpected expenses without going into debt.