Section 2.3 - Budgeting Vocabulary

budget

A plan for making and spending money

Financial Planning

Managing money continuously through life in order to reach your financial goals

Financial Goals

Specific objectives that are accomplished through financial planning helps with Motivation and planning

Fixed expenses

Costs/Bills that do not change from month to month

variable expenses

Expenses that vary from month to month, such as entertainment, car repairs, or doctor bills.

discretionary income

Disposable income available for spending and saving. Income remaining after bills have been paid. Can be used for the fun stuff.

Assests

any items of value that you own

liability

a debt or something you owe

net worth

the difference between assets and liabilities

50/30/20

A budgeting method that allocates 50% to needs, 30% to wants, and 20% to savings and debt repayment