Financial Planning and Budgeting Overview

These flashcards cover key terms and concepts related to financial planning and budgeting, providing definitions to aid in study and retention.

Budget

A plan for managing income and expenses over a specific period.

Cash-flow statement

A financial document showing the inflows and outflows of cash.

Balance sheet

A snapshot of an entity's financial position at a point in time, detailing assets, liabilities, and net worth.

Net worth

The total assets minus total liabilities, representing an individual's financial health.

Fixed expenses

Regular, set amounts that must be paid, such as rent or mortgage.

Variable expenses

Costs that can change from month to month, like groceries or entertainment.

SMART goals

Specific, Measurable, Achievable, Relevant, and Time-bound objectives for effective planning.

Budget variance

The difference between budgeted amounts and actual amounts spent.

Emergency fund

Savings set aside to cover unexpected expenses or emergencies.

Liquidity Ratio

A measure of the ability to pay monthly expenses with available monetary assets.

Investopedia Simulation

An educational tool that allows participants to manage a virtual stock portfolio.

Financial statements

Reports summarizing the financial performance and position of a person or organization.

Spending leak

Unmonitored expenses that can lead to budget overruns.

Monthly budget allocations

Percentage breakdowns of income for various expenses categories.

Financial management habits

Practices that help individuals control and oversee their financial resources.

Personal insurance

Protection against financial loss due to various risks.