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The Vocabulary:

BUDGETING

50/30/20 Rule – Financial planning guideline that suggests spending no more than 50% of disposable income on needs, 30% on wants, and allocating 20% to saving or paying off debt
Budget – An organized plan for saving and spending based on your expected income and expenses
Categorize – Organizing spending by essential and non-essential, then by groups of similar purchases
Disposable income – The money you have to spend or save as you wish after taxes, social security, and other required and optional deductions have been withheld from your gross pay
Emergency fund – An amount of money set aside to cover bills in case of emergency
Expenses – The things people pay for with their money
Financial plan – A plan of action that allows a person to meet not only the immediate needs but also the long-term goals
Fixed expenses – Expenses that remain the same each month
Flexible expenses – Expenditures that change each month and can be reduced or eliminated if necessary
Liabilities – Money owed to individuals, businesses, or institutions
Needs – Items necessary to live, such as clothing, food and shelter
Pay Yourself First – The concept of putting aside a sum of money into savings each month before paying other bills
Recordkeeping – To write down information about a transaction or series of transactions
Saving – The process of setting aside money until a future date instead of spending it today, to provide funds for emergencies, short-term goals, and investments
Short-term goal – Something a person plans to achieve within a one-year time period
Spending – The act of paying money for something
Spending habits – The ways in which a person typically uses money
Variable expenses – Expenses that increase or decrease
Wants – Items that are desired, but that are not needed to live