Personal Finance Chapter 3 Vocab

Money Management

Day-to-day financial activities necessary to manage personal economic resources while working toward long-term financial security

Safe Deposit Box

A private storage areas at a financial institution with maximum security for valuables

Liquid Assets

Cash and items of value that can be easily converted to cash

Liabilities

Amount owed to others

Current Liabilities

Debts that must be paid within a short time, usually less than a year.

Long-Term Liabilities

Debts that are not required to be paid in full until more than a year from now.

Net Worth

The difference between total assets and total liabilities

Assets-Liabilities =Net Worth

Insolvency

The inability to pay debts when they are due is compromised because liabilities far exceed the value of assets

Cash Flow

The actual inflow and outflow of cash during a given time period.

Cash Flow Statement

A financial statement that summarizes cash receipts and payments for a time period.

Income

Inflows of cash to an individual or a household

Take-Home Pay

Earnings after deductions for taxes and other items; also called net pay

Discretionary Income

Money left over after paying for housing, food, and other necessities

Budget

A specific plan for spending income

Budget Variance

The difference between the amount budgeted and the actual amount received or spent

Defecit

The amount by which actual spending exceeds planned spending

Surplus

The amount by which actual spending is less than planned spending