Finance chapter 2

Ace your homework & exams now with Quizwiz!

What are the Money Management Components?

1. Create a system for storing and maintaining personal financial records and documents 2. Create personal financial statements 3. Create and implement a plan for spending and saving

The main purposes of personal financial statements: 1. Report your current __________ 2. Measure your ________ toward financial goals 3. Maintain information about your _________ 4. Provide ______ for preparing tax forms or applying for credit

1. financial position 2. progress 3. financial activities 4. data

Financial experts recommend monthly savings of ___% to ___% of gross income

5-10

How long to keep........ Personal property and investments

As long as you own them

cash and other property with a monetary value

Assets

Net Worth = _______ - __________

Assets - Liabilities

How long to keep........ Copies of tax returns and supporting data

At least 7 years; 10 years is better

A financial statement that reports what an individual or a family owns and owes, also called net worth statement

Balance sheet

A specific plan for spending income, also called a spending plan

Budget

The difference between the amount budgeted and the actual amount received or spent

Budget variance

The actual inflow and outflow of cash during a given time period

Cash flow

a financial statement that summarizes cash receipts and payments for a given period, also called a personal income

Cash flow statement

Debts that must be paid within a short time, usually less than a year

Current liabilities

Money management: __________ and __________ are central to financial planning ◦ Must be coordinated with needs, goals, and personal situations

Daily spending and saving decisions

The amount by which actual spending exceeds planned spending

Deficit

Money left over after paying for housing, food, and other necessities

Discretionary income

Inflows of cash to an individual or a household

Income

How long to keep........ Documents re: purchase and sale of real estate

Indefinitely

The inability to pay debts when they are due because liabilities far exceed the value of assets

Insolvency

Amounts owed to others

Liabilities

Cash and items of value that can easily be converted to cash

Liquid assets

Debts that are not required to be paid in full until more than a year from now

Long-term liabilities

Day to day financial activities necessary to manage current personal economic resources while working toward long-term financial security

Money management

The difference between total assets and total liabilities

Net worth

How long to keep........ Birth certificates, wills, and Social Security information

Permanetly

A private storage area at a financial institution with maximum security for valuables

Safe deposit box

The amount by which actual spending is less than planned spending

Surplus

Earnings after deductions for taxes and other items, also called disposable income

Take-home pay

A _________ is the document that would tell you what you received and spent over the past month

cash flow statement


Related study sets

Just Drive Wisconsin Lesson 2: The Drivers License

View Set

AP Classroom Sensation & Perception Test

View Set

Knewton Alta Chapter 3 Probability Topics Part 1

View Set

Section 6.0 - Cryptography and PKI

View Set

Custom: Custom: ATI PRACTICE ASSESSMENT A # 7 ( RACIEL )

View Set

Principles of Biology Chapter 17: Gene Expression

View Set

القران المكي و المدني درس الاسلاميه الصف العاشر هههاي

View Set

MENTAL HEALTH EXAM - CHAPTERS 11, 14,15,17

View Set

Government Chapter 10, Questions

View Set