Personal Finance Ch 3

Max and Lucille are currently preparing a personal balance sheet. Their total assets are equal to $159,788 and total liabilities are equal to $64,767. What is Max and Lucille's net worth?

$95,021 159,788 - 64,767 = $95,021

Meredith saves $575 a month and her gross income is $6,500 each month. Meredith's liquid assets are equal to $4,000 and her current liabilities are equal to $1,200. Her net worth is $65,000. What is Meredith's savings ratio?

8.85% 575/6500 = 0.885 = 8.85%

Derek has liquid assets of $4,450 and he saves $615 a month. His current liabilities are equal to $1,750 and monthly credit payments of $425. Derek's gross income is $5,900 each month and a take-home pay of $4,775. What is Derek's debt-payments ratio?

8.90%

How should the assets you own be reported in your personal balance sheet?

At the actual or estimated current value of the asset

According to the video, what can be thrown in a wastebasket?

Receipts for small non-tax-deductible purchases and Receipts for expired warranties

Bailey is currently learning about the proper places to keep personal financial records in one of her classes in college. Where should Bailey tell her parents to keep her birth certificate, their marriage license, and mortgage documents for their house?

Safe Deposit Box or Fireproof Safe

The Morrison family of six budgets $600 a month for food. This month the family spends $534 on food expenses. For this month, the Morrison family has a _____ of $_____.

Surplus of $66

According to the video, what is the second step in preparing a personal balance sheet?

To list your liabilities.

According to the end of the video, what is the goal of budgeting?

To make sure you live within your income To spend your money wisely To attain your financial goals

The _____ ratio compares your liquid assets to your current liabilities.

current

According to the video, a(n) _____ is the amount by which actual spending exceeds planned spending.

deficit

A _____ should be used to keep records that you need on a regular basis and documents with limited value.

home file