budgeting study set

interest

the price paid for the use of borrowed money

inflation

A general and progressive increase in prices

Cash Flow

Money coming in & going out

Surplus

Excess cash (when you spend less than you earn)

Income

Money received (earnings, gifts, interest, profit from selling)

Hourly Wage

Amount of money earned per hour worked

Overtime

Typically hours worked over 40. Pay is usually 1.5 times hourly rate

Salaries

Fixed annual amount spread out over a number of pay periods

Tips

Payments to workers for providing service to customers

Commissions

Payments to sales people for selling products/services. Money earned based on a % of sales

Payroll Deductions

Amounts taken out of your pay.

Pay Stub

Attachment (to paycheck) showing amount earned (gross pay) & detailing payroll deductions to calculate your net pay (take-home pay).

Gross Pay

Amount earned before any payroll deductions

Net Pay

Amount of employees gross pay that remains after deductions, such as taxes and retirement contributions, are make; take-home pay

Federal Income Tax

Amount of federal tax on earnings imposed by the IRS based on tax tables

State Income Tax

Amount of tax on earnings at the state level based on percent of income

Social Security Tax

Tax on income paid by both employee and employer to fund the social security system

Medicare Tax

Tax on income used to pay for the Medicare program provided to individuals over 65

Health Insurance

Employee's obligation toward the cost of the health plan they are covered under

401K Deduction

Employee's contribution to the employer-sponsored 401K retirement plan

Expense

Amount of money that we need to pay for or buy something.

Fixed Expense

An expense that remains the same each month. Ex. Rent, cable bill, mortgage, car

Variable Expense

An expense that fluctuates from month to month. Ex. Groceries, utilities, gifts

Periodic Expense

Expense that do not occur on a regular monthly basis. Ex. Car maintenance, medical exp.

Deficit

When you spend more than you bring in

Budget

Detailed estimate of income & expenses for a specific period of time. A plan for managing your money for a given period of time.

Savings

Amount of money you put aside for future use.

Short-Term Savings

Savings you may need in the near future. 3-6 months

Long-Term Savings

Money you put away for major expenses in the future.

Assets

Things you own (having some monetary value)

Market Value

Price at which an asset would sell

Liquidity

Ability to convert to cash & maintain value

Liabilities

Financial obligations (debts) that must be paid. Debts that you owe such as car, home/school loans.

Net Worth

Assets - Liabilities \= Net Worth

Financial Records

Documentation for financial transactions. (pay stubs, receipts)

Budget Estimate

Projection of income & expenses

Budget Variance

What you actually spent

Disposable Income

Gross pay minus taxes & deductions. Ex. Food, clothes, rent

Discretionary Income

Money left after paying for all necessities. Fun money! Pays for wants: Vacation

Pay Yourself First

Pay into savings first, then live off the rest

Principal

Amount you save or invest

Interest

Amount earned on the principal

Filing System

Organized method of storing information

Digital Documents

Copies of documents created/stored electronically

Expenditures

Purchases you make and expenses you have

Forecast

Predict & estimate

Reserve Fund

Special account used for unexpected expenses