ECONOMICS
BUDGETING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Net pay
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Gross pay
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Taxes
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Deductions
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Detailed explanation-1: -Your first priority should be to focus on the 20% of your salary. Before you go ahead to spend your income on your needs and wants, set this percentage of your salary for your investments and savings. Only after setting this, should you focus on the remaining 80% of your salary.
Detailed explanation-2: -Try a simple budgeting plan. We recommend the popular 50/30/20 budget to maximize your money. In it, you spend roughly 50% of your after-tax dollars on necessities, no more than 30% on wants, and at least 20% on savings and debt repayment.
Detailed explanation-3: -For an individual, net income is the “take-home” money after deductions for taxes, health insurance and retirement contributions.
Detailed explanation-4: -The reason why it’s important to use net pay instead of gross pay when budgeting is because it gives you an idea on how much you should afford, and how much tax deductions could be.
Detailed explanation-5: -Rule One. Give Every Dollar a Job. Rule Two. Embrace Your True Expenses. Rule Three. Roll With the Punches. Rule Four. Age Your Money.