Budgeting Vocabulary

Question 1

50/30/20 Budget

Answer 1

A budgeting method that allocates 50% to needs, 30% to wants, and 20% to savings and debt repayment

Question 2

Auto Lease

Answer 2

A type of auto financing that allows you to “rent” a car from a dealership for a certain length of time and amount of miles. Once the time period ends, you either return the car or purchase the car if that is an option in your contract.

Question 3

Budget

Answer 3

A plan of your expected income and how you will use it to meet your expected expenses over a period of time

Question 4

Cash Envelope Budget

Answer 4

A budgeting method where money for monthly spending is taken out in cash and placed in labeled envelopes according to budget categories. Spending occurs only from the corresponding envelopes.

Question 5

Cost of Living

Answer 5

The amount of money needed to sustain a certain level of living, including basic expenses such as housing, food, taxes, and healthcare; often used when comparing how expensive it is to live in one city versus another

Question 6

Deduction

Answer 6

Any items subtracted from your paycheck, including state and federal income taxes, Social Security, health insurance or 401(k) contributions