Chapter 3
What percentage of Americans are living paycheck to paycheck?
70%
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.
Envelope system
A series of envelopes that are divided into categories and are used to store cash for planned monthly expenses.
Cash flow statement
A summary of all the income and outgo over a certain time period.
Budget
A written cash flow plan.
Carbon checks
After writing a check, this is left in your checkbook as a written account of what you wrote on the check, or a "carbon copy" of the check you wrote.
Discretionary expenses
Also known as non essential expenses. Examples: Eating out, gifts, and candy.
Impulse purchase
An item that is bought without previous planning or consideration of the long-term effects.
Intermittent expenses
Expenses that occur at various times throughout the year and tend to be in large lump sums. Examples: Tuition payments, athletic or club dues, car repairs.
Variable expense
Expenses that vary from month to month. Examples: electricity, gasoline, groceries, clothing.
Your monthly rent is this type of expense.
Fixed expense
Reconcile
The process of matching your bank statement with your checkbook.
Fixed expense
These expenses remain the same from month to month. Examples: Rent, mortgage, insurance premiums, cable bill.
Groceries are an example of this type of expense:
Variable
Overdraft
When money is withdrawn from a bank account and the available balance goes below zero.
Check register
Your own record of all your transactions.
Non-essential expenses are also known as this
discretionary