Chapter 5 Money Management Strategy [Finance]

Insolvency

The inability to pay debts when they are due

Income

Cash flow; The money you receive

Budget

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

Encounter

To experience unexpectedly

Liabilities

The debts you owe

Deficit

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

Discretionary Income

Money you have left after paying for your essentials

Market Value

The price at which property would sell

Cash Flow

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

Surplus

Extra money that you can spend or save

Budget Variance

The difference between the budgeted amount and the actual amount spent

Take-home Pay

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

Alternative

Option

Trade Off

An opportunity cost

Home files is the best place to keep?

Cancelled Checks

Your net worth is a difference between?

Assets and Liabilities

Cars fall into this category of possessions

Personal Possessions

An example of cash outflow?

Credit card payment

Net Pay

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

An example of variable expense is?

Medical Expenses

The key to establishing a sound financial future is to?

Increase your savings

Balance Sheet

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

What are the characteristics of a successful budget?

• Carefully planned

• Practical

• Flexible

• Easily accessed

Safe Deposit Box

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

Discretionary Income

The money left over after essentials are paid for

Liquid Assets

Cash and items that can be quickly converted to cash

Net Worth

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

Assets - Liabilities = Net Worth

Personal Financial Statements

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

Money Management

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