Dave Ramsey Foundations in Personal Finance - Chapter 6 Video Terms Questions and Answers Graded A+

Dave Ramsey Foundations in Personal Finance - Chapter 6 Video Terms Questions and Answers Graded A+ What is a cash flow plan? A plan that helps you track your income and expenses to ensure that you are not overspending. What does the term "fixed expenses" refer to in budgeting? Expenses that remain the same amount each month, such as rent or mortgage payments. Why is it important to track your spending? Tracking your spending helps you understand where your money is going and where you can make adjustments. What is the difference between "needs" and "wants" in budgeting? Needs are essential items like food, shelter, and transportation, while wants are non-essential items that can be postponed or eliminated. 2 What is a zero-based budget? A budgeting method where every dollar is assigned a specific purpose, leaving no money unaccounted for. How does budgeting help prevent debt? By planning your spending in advance, you can avoid using credit and stay within your means. What is the envelope system in budgeting? A method where cash is divided into envelopes for different spending categories, helping to control discretionary spending. What is the purpose of an emergency fund? To provide financial security and cover unexpected expenses without going into debt. How can automating savings help with financial success? Automating savings ensures that money is consistently put aside for future goals, making it easier to save. 3 What is the 50/30/20 rule in budgeting? It is a guideline where 50% of your income goes toward needs, 30% toward wants, and 20% toward savings and debt repayment. What role does setting financial goals play in budgeting? Financial goals provide motivation and direction, helping you prioritize your spending and saving decisions. How can creating a budget help you pay off debt? A budget allows you to allocate extra funds toward debt repayment, speeding up the process of becoming debt-free. What is the purpose of reviewing your budget regularly? Regularly reviewing your budget helps you adjust for changes in income, expenses, and financial priorities. Why should you avoid impulse buying when sticking to a budget? Impulse buying can lead to overspending