Personal Finance, Chapter 3, Terms
Budget
A PLAN for using money to meet your wants and needs.
Personal Financial Statement
A document that provides information about an individual's current financial position and presents a summary of income and spending.
Insolvency
A financial state that occurs if liabilities (debts) are greater than assets (things you own).
Balance Sheet
A financial statement that reports assets, liabilities, and owner's equity on a specific date.
Cash Flow Statement
A financial statement that shows the flow of money in and out of the business.
Consumer Price Index (CPI)
A measure of the changes in prices for commonly purchased goods & services in the US.
Safe-Deposit Box
A small, secure storage compartment that you can rent in a bank, used to secure valuables.
Wealth
An abundance of valuable material possessions or resources (assets, real estate, possessions investments).
deficit
An excess of federal expenditures over federal revenues.
Assets
Any items of value that an individual or company owns, including cash, property, personal possessions, and investments.
Liquid Assets
Cash and assets (physical items you own) that can be quickly converted to cash
Discretionary Income
Income — the money left over AFTER paying for the basic needs (food, clothing, shelter, transportation, and medication).
Real Estate
Land and any structures that are on it: house or building owned by the family
Money Management
Planning how to get the most from your money.
safe deposit box
a small, secure storage compartment that you can rent in a bank, usually for $100 a year or less
Current Liabilities
liabilities due within a short time, usually within a year
long-term liabilities
liabilities owed for more than a year
Surplus
Surplus — extra money that can be spent or saved, depending on a person's financial goals and values.
Net Pay (Take-home Pay)
The amount of income left after taxes and other deductions are taken out of your gross pay.
Liabilities
The debts that you owe.
Budget Variance
The difference between the budgeted amount and the actual amount that you spend.
Net Worth
The difference between your ASSETS and your LIABILITIES (or the money you have left after selling your assets & paying off your debts).
Deficit
The financial situation that occurs when more money is spent than is earned or received.
Cash Flow
The money that actually goes into and out of your wallet and bank accounts.
Income
The money you receive (cash inflow), may include a paycheck from a job, an allowance from your parents, or interest earned in your savings account.
Market Value
The price at which property would sell