Intro to PersFin and Budgeting

budget

a written plan for giving, saving, and spending

income

money received for work, as a gift or through investments

fixed expense

expenses which stay basically the same from month to month

variable expense

expense that varies in dollar amount from month to month, but that you can expect to have every month

intermittent expense

expense that occurs at various times throughout the year and tends to be in large, lump sums

discretionary expense

expense for things you don't need

Zero-Based Budget

A cash flow plan that assigns an expense to every dollar of your income, wherein the total income minus the total expenses equals 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 and other payroll deductions

debt

money owed to another person or company

paycheck to paycheck

an expression used to describe a person or household whose monthly income is devoted to expenses and has little to no savings

credit

The granting of a loan and the creation of debt; any form of deferred payment

interest rate

the percentage of principal charged by the lender for use of its money

interest

the additional cost a lender charges for borrowing their money

financial plan

a plan of action that allows a person to meet not only their immediate needs but also their long term goals

net worth

total assets minus total liabilities

asset

anything that is owned by an individual, including money in the bank or investments

liability

financial debts or obligations

Positive Net Worth

assets are greater than the value of liabilities

Negative Net Worth

liabilities is larger than the value of assets

expense

the cost of goods or services; money paid out

financial literacy

the knowledge and skillset necessary to be an informed consumer and manage finances effectively

personal finance

all the financial decisions an individual or family must make in order to earn, budget, save, spend, and give money over time