Personal Finance Chapter 3
personal financial statement
A document that provides information about an individual's current financial position and presents a summary of income and spending
insolvency
A financial statement that occurs if liabilities are greater than assets
budget
A formal, written statement of expected income and expenses for a future period of time
consumer price index (cpi)
A measure of the changes in prices for commonly purchased goods and services in the United States
safe-deposit box
A small, secure storage compartment that you can rent in a bank
personal balance sheet
Also, a net worth statement, a financial statement that list items if value owned, debts owed, and a person's net worth
cash flow
Amount of cash that is available at any given time
wealth
An abundance of valuable material possessions or resources
liquid assets
Cash and items that can be quickly converted to cash
income
Cash inflow, or the money you receive
surplus
Extra money that can be spent or saved, depending on a person's financial goals and values
assets
Items of value that an individual or company owns, including cash, property, personal possessions, and investments
real estate
Land and any structures that are on it, such as a house or other buildings, that a person or family owns
money management
Planning how to get the most from your money
market value
Price at which property will sell
What's an example of a liquid asset?
a savings account
The money left over after essentials are paid for
discretionary income
What's an example of a variable expense?
electric bills
A home fire safe-box is a good way to protect an important document from theft
false
Take-home pay is equal to your salary
false
The total of your variable and fixed expenses is your cash flow
false
You should include bonuses that you might get at work when you are estimating your income
false
Your car is an example of a liquid asset
false
A good budget has all the following EXCEPT
inaccessibility
A cash flow statement gives you important feedback on your?
income and spending patterns
The debts you owe?
liabilities
Cash & items that can be quickly converted to cash
liquid assets
The price at which a property could be sold
market value
The method of planning how to get the most from your money
money management
One use of discretionary funds is spending on
movies
The difference between the amount you own and the debts you owe
net worth
Your net worth goes up when you
pay off previous debts
Documents that provide info about your current financial position
personal financial statements
What's a savings option employers offer?
putting paycheck deductions in employee's retirement funds
A small secure storage compartment that can be rented at a bank
safe deposit box
What is the first step in planning a budget?
setting financial goals
Extra money that can be spent or saved
surplus
What's an example of a current liability?
taxes
A car loan is a liability
true
A deficit is when more money is spent than is earned or received
true
A measure in the changes in prices for commercially purchased goods & services is the CPI
true
A title to your home is an example of a personal financial document
true
Insolvency happens when the total of your liabilities is greater than your assets
true
take-home pay
The amount of income left after taxes and other deductions are taken out of your gross pay (net pay)
liabilities
The debts you owe
net worth
The difference between the amount that you own and the debts that you owe
budget variance
The difference between the budgeted amount and the actual amount that you spend
deficit
The financial situation that occurs when more money is spent than is earned or received
discretionary income
The money left after paying for the essentials, such as food, clothing, shelter, transportation, and medication
What's a disadvantage of using a safe-deposit box?
can cost $100 a year to rent
A situation that occurs if a person spends more than he or she receives
deficit
