Personal Finance Chapter 2 Study Guide
What is a budget?
A written plan for saving, giving, and spending
What is considered income?
All money that you receive, including money from your job, gifts, allowances, etc.
What is an intermittent expense?
An expense that occurs at various times throughout the year and tends to be in large lump sums example: insurance every 6 months
What is a variable expense?
An expense that varies in dollar amount from month-month, but that you can expect to have every month example: electricity; utilities
The way you break up your ______ (in your budget) is up to you.
Categories
What is commission?
Earnings based on a percentage of the sales made
Tracking your _____ throughout the month is important because it lets you know if you are _____ to the budget that you _______.
expenses; sticking; created
When can budgeting start?
now
A marriage is a ______. This includes ______ and finances.
partnership; budgeting
You need to know your money _____, whether you are married or single
personality
Can budgeting still happen when you have irregular income?
yes
Where should you remove money from when you overspend in a budget category?
another spending category
Budgeting gives you _____ of your money and sets you up for financial ______ in the future.
control; success
Why do most people not budget?
They lack the discipline to stick to the budget
Personal Finance is ______ head knowledge and ______ behavior.
20%; 80%
What percentage of Americans actually create and maintain a budget?
35%
What percentage of Americans feel stress and anxiety about the amount of personal debt they have?
46%
What is the envelope system?
A method of budgeting that uses envelopes with labels for specific budget categories each moth
What is a discretionary expense?
A non-essential expense for things that you don't need examples: eating out, nails
Find creative ways to be _______ with your time and money.
Generous
What is the second component of budget?
Giving
What is the first component of budget?
Income
What is irregular income?
Income that comes in at different amounts or at different times, or both
How often should you create budgets?
Monthly
What is the third component of budget?
Saving
What are the 4 walls?
Shelter, utilities, transportation, and food
What is the fourth component of budget?
Spending
What is gross-income?
The amount of money that you make, BEFORE taxes and deductions
What is net income?
The amount of money that you take home on your paycheck
What is income?
The amount of money you earn, the first component of a budget example: rent
What is a zero-based budget?
The best kind of budget, every dollar has a home and direction/plan. Your income, minus your expenses, is equal to zero
What is the best way to budget?
The way that works for you (on paper, a spreadsheet, budgeting app, etc.)
What should you use to plan your budget for upcoming expenses?
a calendar
What is a cash flow statement?
a statement that shows what has already happened to your money
What do you need to help you with your finances as a single person?
an accountability partner