Chapter 2 Consumer Economics

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Income

Money received for work, as a gift, or through investments

Budget

A written plan for giving, saving, and spending

Fixed Expense

An expense that remains the same from month to month ie. rent, mortgage, car payments, gym membership, movie and music subscriptions

Variable Expense

An expense that varies in dollar amount from month to month, but that you can expect to have every month ie. groceries, gas, utilities, clothes

Intermittent Expense

An expense that occurs at various times throughout the year and tends to be in large, lump sums ie. tuition bill, life insurance premium, home repairs, pest control

Discretionary Expense

An expense for things that you don’t need ie. eating out at restaurants, gifts, jewelry, makeup

Zero-Based Budget

A cash-flow plan that assigns an expense to every dollar of your income; the goal is for the total income minus the total expenses to equal zero

Net Income

What a person earns after payroll taxes and other deductions are taken out; often referred to as take-home pay

Gross Income

The amount you earn before taxes an other payroll deductions

Cash-Flow Statement

A record that summarizes all of the income and outgo (spending) over a certain time period

Irregular Income

Income that comes in at different amounts or at different times, or both I.e. babysitting, lawn mowing, garage sales, seasonal retail job, bake sale

Commission

Earnings based on a percentage of the sales made