Personal Finance Unit 2 Review
Assets
Any item of value you own
Balance Sheet
Financial statement that lists the items of value that you own, the debts you owe, and your net worth.
Allowance
The amount of money you plan to use for a certain budget category
3 examples of variable expenses
-food -clothing -electricity
Cash Flow Statement
A document that provides a summary of your cash flow during a particular period, usually a month or year
Money Management
The method of planning how to get the most from your money.
Discretionary income
The money left over after essentials are paid
Cash Flow
The money that goes into and out of your wallet and accounts
Disposable Income
The portion of your income that is spent on the basic living necessities
3 steps to budgeting
-pay for basic needs -save for future expenses -spending discretionary income
Surplus
A positive cash flow; extra money that can be spent or saved
Deficit
A situation that occurs if a persons more than he or she receives
Variable Expense
A type of expense that changes from one month to the next
Take-home pay
Amount of income left after taxes and other deductions are taken out of your gross pay
Income
Cash inflow, or the money you recieve
Fixed Expense
Expenses that are consistent from one month to the next
What is the difference between GROSS INCOME and NET INCOME?
Gross is before the taxes and net is what you take home
Liabilities
The debts that you owe
Net Worth
The difference between the amount you own and the debts you owe
Budget variance
The difference between the budgeted amount and the actual amount that you spend.
What % of your net income should be spent on transportation?
15%
What % of your net income should be spent on housing?
30%
3 examples of a fixed expense
-mortgage -college -car