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 state that occurs if liabilities are greater than assets

personal balance sheet

a financial statement that lists items of value owned, debts owed, and a person's net worth

consumer price index (CPI)

a measure of the changes in prices for commonly purchased goods and services in the United States

budget

a plan for using money to meet wants and needs

safe-deposit box

a small, secure storage compartment that you can rent in a bank

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 building, that a person or family owns

money management

planning how to get the most from your money

take-home pay

the amount of income left after taxes and other deductions are taken out of your gross 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

cash flow

the money that goes into and out of your wallet and bank accounts

market value

the price at which property would sell

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