Chapter 5 Money Management Strategy [Finance]

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29 Terms

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Insolvency

The inability to pay debts when they are due

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Income

Cash flow; The money you receive

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Budget

A plan for spending and investing your money to meet your wants and needs

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Encounter

To experience unexpectedly

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Liabilities

The debts you owe

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Deficit

The financial situation that occurs when you spend more money than you receive

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Discretionary Income

Money you have left after paying for your essentials

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Market Value

The price at which property would sell

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Cash Flow

The movement of cash in and out of your wallet and bank accounts

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Surplus

Extra money that you can spend or save

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Budget Variance

The difference between the budgeted amount and the actual amount spent

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Take-home Pay

The amount of income left after deductions (taxes) are subtracted from your gross pay

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Alternative

Option

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Trade Off

An opportunity cost

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Home files is the best place to keep?

Cancelled Checks

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Your net worth is a difference between?

Assets and Liabilities

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Cars fall into this category of possessions

Personal Possessions

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An example of cash outflow?

Credit card payment

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Net Pay

The amount of income after taxes and other deductions are taken out of your paycheck

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An example of variable expense is?

Medical Expenses

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The key to establishing a sound financial future is to?

Increase your savings

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Balance Sheet

A financial statement that lists items of value that you own, debts that you owe, and your net worth

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What are the characteristics of a successful budget?

  • Carefully planned

  • Practical

  • Flexible

  • Easily accessed

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Safe Deposit Box

A small secure storage compartment that can be rented in a bank

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Discretionary Income

The money left over after essentials are paid for

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Liquid Assets

Cash and items that can be quickly converted to cash

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Net Worth

The difference between the amount you own and the debt you owe

Assets - Liabilities = Net Worth

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Personal Financial Statements

Documents that provide information about your current financial position; Present a summary of your income and spending

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Money Management

The method of planning how to get the most from your money