Budgeting, compound growth, inflation, and the risk-return trade-off — the concepts every plan depends on.
A budget is a plan for every dollar you earn, not a restriction
Compound growth is interest earning interest, repeated many times
Inflation is the gradual loss of purchasing power over time
The forecast line shows projected net worth month by month — assume it WILL be wrong on any single point and useful on the trajectory
Higher expected returns come with higher short-term variability
Essential expenses are the ones you cannot cut without hardship
CPI tracks the cost of a fixed basket of goods over time
Nominal return is the raw percentage; real return subtracts inflation
Standard deviation measures how much returns vary around their average
Allocate 50% of after-tax income to needs, 30% to wants, 20% to savings and debt payoff
Years to double ≈ 72 ÷ annual return rate
A dollar today is worth more than a dollar in the future
Risk tolerance is the volatility you can live with without panicking
Assign every dollar a specific job before the month begins