Personal Finance Unit 2

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What is a variable expense and what is an example of one?

An expense that can vary from month to month, water bill

What is a periodic expense and what is an example of one?

An expense that happens not every month, property tax

What is a fixed expense and what is an example of one?

An expense that will not change from month to month, mortgage

What is net worth?

Assets- liabilities= net worth

What is a liability and give an example of a liability you have?

Financial obligations, my car loan

How can you increase your net worth?

Getting more assets and getting rid of liabilities

How can you decrease your net worth?

Getting more liabilities, having less assets

What is net pay and how is it calculated?

Gross pay - deductions= net pay

Will your budget ever change? Why or why not?

Yes, if income changes

Personal Balance Sheet

a financial statement that show net worth

What is discretionary income and would it be used to pay for needs or wants?

The amount of income you have left after you have paid for all of your needs, need

What is cash flow?

The money that actually goes in and out of your wallet or bank

What is gross pay?

The money you make before taxes

What is a budget deficit?

When you plan/ actually spent more than you make

What is a budget variance?

Difference between estimated and actual expenses

How do you calculate a variance?

Estimated - actual= variance

How do you calculate net cash flow?

Income- expenses- net cash flow

What is a budget?

Is a plan for managing your money for a given period of time

What is an asset and give an example of an asset you have?

Item that has economic value, my cloths

What is income and what are some sources of income?

Money you make, job, gifs, allowance

Expense-

Money you must pay to others Food Gasoline Clothing Entertainment

Does a budget use gross pay or net pay? Why?

Net pay bc you don't get all the money from gross pay

Why should you add savings as an expense item in your budget?

So you can insure a secure and comfortable future for yourself

What is an expense?

Stuff you have to pay for, like rent or car insurance

Why is it important to create a budget?

To insure a comfortable life and not going into debt

What does Pay Yourself First mean?

Treating your savings as a fixed expense

What determines how your budget looks (where you plan to spend your money and how much you plan to spend)?

Wants, needs, income, dependents, expenses

What is a budget surplus?

When you plan/ actually have less expenses than you do of income

Liquidity

ability to turn an asset into cash while maintaining its value

Zero balance

income=expenses Achieved by adjusting Variable Expenses and Savings

Income

money you receive Pay check Gifts Allowance

Liquidity Risk-

possibility of having a difficult time turning an asset into cash or its value is now smaller

Net force-

take home pay (the amount of the paycheck) Net pay/net income- after deductions-what you actually put in your wallet/use/check

Payroll deductions

taxes, retirement, health benefits

Discretionary income

the amount of income you have left after you have paid for all of your needs Total income- Rent and food and utilities and ect. = discretionary income It is what you use to pay for your wants

Gross income

total amount of money earned during a pay period(salary of hourly wage x hours worked)


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