Surplus: extra money that you can spend or save, depending on your financial goals and values

Money Management: the day-to-day financial activities necessary to get the most from your money

Liabilities: the debts that you owe

Assets: any items of value that you own, such as cash, real estate, personal possessions, and investments

Wealth: is property that has a money value or exchangeable value

Cash Flow: the movement (cash) in and out of your wallet and/or your bank account

Personal Financial Statement: gives information about your current financial position and presents a summary of income and spending

Personal Balance Sheet: a financial statement that shows what you own and what you owe

Examples of Liabilities: student loans, credit card balances, and mortgages

Examples of Assets: your home, jewelry, and art

How do you increase your net worth?

• Reducing your expenses

• Reducing your spending and your debts

• Increasing your savings

• Increasing your investments

Steps to develop a budget:

1. Set Your Financial Goals

2. Estimate Your Income

3. Budget For Unexpected Expenses

4. Budget for Fixed Expenses

5. Budget for Variable Expenses

6. Record What You Spend

7. Review Spending and Saving Patterns

Characteristics of a successful budget:

• Carefully planned and related to your goals

• Practical

• Flexible

• Easily accessible