Personal Finance (E3) Study Guide

- Income is the money you earn by working at a job or by

making good investments.
- Income the starting point of personal financial management!
- Choosing a career path is a combination of learning what
jobs are available, what interests you, and what you are
willing to become qualified for.
- As your education, skills, and experience increase, so does
your earning potential
- Your earning potential = how much money you could earn or
make
- A household budget is a plan for spending and saving.
- There are three parts of a budget:
1. Income → money coming in

2. Expenditures → money going out

3. Savings → money set aside for later
- Fixed expenses - expenses that don’t change (like house or
rent payment)
- Variable expense - expenses that change (like food or gas)
- The following are things that you need to account for in your
budget: rent/house payment, utilities (bills), food,
transportation, entertainment, cell phone, school, doctor’s
visit, clothes, household items, personal items, baby items,
etc.
- Saving money is good for future purchases or unexpected
needs in the future.
- Saving gives you flexibility and financial security.
- Debt can be good AND bad.
- Debt can be good because it allows you to get what you
need/want NOW and pay later
- Debt can be bad because of interest/fees and risks involved