PFL Chapter 3 Test

Zero-Based Budget

A cash flow plan that assigns an expense to every dollar of your income, wherein the total income minus the total expenses equals zero

carbon check

A copy of each check you write

cash flow statement

A summary that shows total income and spending for a given time period

budget

A written cash flow plan

crisis

A written plan removes the "management by ________" from your finances.

money fights

A written plan, if actually lived and agreed on, will remove many of the ______ _______ in a relationship.

overdrafts, stress

A written plan, if actually lived and agreed on, will remove many of the ______________ from your life, consequently removing a lot of _________.

guilt shame fear

A written plan, if actually lived and agreed on, will remove much of the _____, _____ and ____ that may be part of buying necessities such as food or clothing.

overspending

A written plan, if actually lived and agreed on, will show if you are ____________ in a certain area.

impulse purchase

An item that is bought without previous planning or consideration of the long-term effects

fixed expenses

Expenses that do not change from month to month, such as auto insurance or rent.

variable expenses

Expenses that vary from month to month, such as electricity, gas, groceries, and clothing.

less

Live on ______ than you make. Don't spend every dollar of your paycheck.

overdraft

Occurs when money is withdrawn from a bank account and the available balance goes below zero

envelope system

Series of envelopes that are divided into categories (food, entertainment, gas, etc.) and are used to store cash for planned monthly expenses

true

The number 1 cause of divorce in north america is stress and disagreements over money

A cash flow statement summarizes all of the income and spending over a certain time period. A budget is a written plan for saving, giving, and spending. Cash flow= already taken place. Budget= plan of what will take place.

Whats the difference between a cash flow statement and a budget?

it ensures that every dollar you make is assigned to a specific place

Why is the zero based budget the best method of budgeting?

70

______% of Americans are living paycheck to paycheck.

Zero-Based Budget

____________ gives every dollar a name on paper; o purpose, before the month begins. This is the best method of budgeting since it ensures that every dollar you make is assigned a specific purpose.

Make over spending more likely

doing a budget does not

discretionary expenses

expenses for things we don't need like eating out, gifts, candy

intermittent expenses

expenses that occur at various times throughout the year and tend to be in large lump sums like tuition payments, gym memberships, car repairs

reconcile

the act of matching your bank statement with your checkbook.

True

the envelope system works great for managing spending on things that don't normally have a fixed monthly expense.

People leave things out, they are over complicated, and they don't live on it.

what are the reasons cash flow plans sometimes don't work?

all of the above

which of the following is a consequence of over drawing your checking account

Balanced

you must keep your checking account _____________.

check register

your _______ ________ has the most current balance.

all of the above

your monthly budget should include