Personal Financial Stewardship {Chapter 2}
Balance Sheet
A financial statement that reports what an individual or a family owns and owes; also called a net worth statement or statement financial position.
Cash Flow Statement
A financial statement that summarizes cash receipts and payments for a given period; also called a person income and expenditure statement.
Safety Deposit Box
A private storage area at a financial institution with maximum security for valuables
Budget
A specific plan for spending income; also called a spending plan
Liabilities
Amounts owed to others
Liquid assets
Cash and items of value that can easily be converted to cash.
Assets
Cash and other property with a monetary value
Money Management
Day-to-day financial activities necessary to manage current personal economic resources while working toward long-term financial security.
Long-term liabilities
Debts that are not required to be paid in full until more than a year from now
Current Liabilities
Debts that must be paid within a short time, usually less than a year
Take-home pay
Earnings after deductions for taxes and other items; also called disposable income
Income
Inflows of cash to an individual or a household
Net Worth Calculation
Items of Value (what you own)- Amounts owed(what you owe)=Net worth (your wealth)
Discretionary Income
Money left over after paying for housing, food and other necessities.
Cash Flow
The actual inflow and outflow of cash during a given time period
Deficit
The amount by which actual spending exceeds planned spending
Surplus
The amount by which actual spending is less than planned spending
Budget Variance
The difference between the amount budgeted and the actual amount received or spent
Net Worth
The difference between total assets and total liabilites
Insolvency
The inability to pay debts when they are due because liabilities far exceed the value of assets