Personal Wealth Test Ch 1

unwise habit

behavior that is considered poor or detrimental to your well-being, often leading to negative consequences

sensible habit

practice that is considered thoughtful, beneficial, and promotes positive outcomes in your life

needs

things that are essential to your health and security

wants

things that make life more interesting and fun, but you can get by without

values that affect our thoughts, decisions, and actions

experiences, beliefs, family and friends

what does ‘s’ stand for in smart (goals)

specific

what does ‘m’ stand for in smart (goals)

measurable

what does ‘a’ stand for in smart (goals)

applicable

what does ‘r’ stand for in smart (goals)

relevent

what does ‘t’ stand for in smart (goals)

time-bound

short-term goal

0-3 months to achieve

medium-term goal

3 months to a year to achieve

long-term goal

more than a year to achieve

what does “shoot for the moon, even if you miss, you’ll land among the stars” mean

when saving money and setting a clear goal, even if you don’t achieve the original amount you were aiming for, you still benefitted yourself by saving money

what does the ‘d’ stand for in decide?

define

what does the ‘e’ stand for in decide?

establish

what does the ‘c’ stand for in decide?

choose

what does the ‘i’ stand for in decide?

identify

what does the second ‘d’ stand for in decide?

decide

what does the ‘e’ stand for in decide?

evaluate

delayed gratification

waiting to buy something until you know you can afford it

values

the idea and beliefs that are most important or most meaningful to you

instant gratification

deciding you want something and buying it right away

opportunity cost

the loss of potential gain from alternatives when one alternative is chosen

cash flow

the money flowing into your pockets as income and flowing out as expenses and debt

spending plan/budget

helps you manage your cash flow so you have the money to pay for the things you need (and want)

fixed expenses

expenses that cost the same every time- often a set monthly payment

variable expenses

common expenses where the amount is different each time, such as paying for groceries or gas

periodic expenses

expenses that aris occasionally during the year, usually less than once a month

emergency fund

gives you a money cushion when you’re sideswiped by a big, unplanned expense that might throw your budget off course

saving for 6-8 months

positive cash flow

when your income is more than expenses, resulting in a surplus of money at the end of a budgeting period (income > expenses)

negative cash flow

when your expenses are more than your income, resulting in a deficit of money at the end of a budgeting period (income < expenses)

zero-balance budget

a budgeting method where your income minus your expenses equals zero at the end of a budgeting period (income=expenses)

what does ‘pyf’ stand for?

pay yourself first

comparison shopping

the practice of comparing the price of products or services from different vendors before buying

income

the money you recieve

expenses

what you spend money on

spending log

a record of everything you spend money on and how much you spend each day

how much do teens typically spend weekly?

$18.50

‘pay yourself first’ fund

the first thing you should do when you receive money is to set aside a specific amount for your goals

first step in financial planning process

analyzing values, money management habits, and your financial situation

second step in financial planning process

set ‘smart’ financial goals

third step to financial planning process

plan when needs to be done with checkpoints and plan strategies to cope with unexpected events

fourth step to financial planning process

carry out your plan and track your progress using systems that work for you

fifth step to financial planning process

monitor and reflect on your progress; adjust your plan as your situation changes