Personal finance chapter 4
Trade off
Going up one option in exchange for another
Which of the following is not listed on a personal net worth statement? -income -assets -liabilities -net worth
Income
Which of the following is a fixed expense? -food -rent -entertainment -utilities
Rent
Budget
A spending and saving plan based on expected income and expenses
T or F a favorable variance results from spending less than you budgeted for spending
T
Net worth
The difference between assets and liabilities
Opportunity cost
The value of your next best option-what you are giving up
Wants
Things people desire for reasons beyond survival and basic comfort (examples: new cars, vacations, luxury items)
Financial plan
A comprehensive plan listing goals alone with steps and a timeline for reaching them
Variable expenses
Costs that can go up and down each month (examples: entertainment)
Fixed expenses
Costs that do not change each month (examples: rent, insurance, loan payments)
Liabilities
Debts that you owe
Charitable giving
Donating money or time to a cause in which you believe
Cash outflows
Expenses, or items for which you must spend money
T or F Financial resources are unlimited and growing
F
Which of the following is a variable expense? -rent -food -insurance -car payment
Food
T or F keeping good records will help you prepare a better budget
T
Needs
Things needed for survival (examples: food, clothing, shelter)
T or F a personal net worth statement lists income and expenses
F
T or F a trade off is the value of what you are giving up when you make a purchase
F
T or F charitable giving is a mandatory fixed expense
F
Cash inflows
Income from your job, investments, and other sources like allowance or interest income
Assets
Money and items of value that you own (example: boat or a car)
Financial resources
Money or other items of value that are used to acquire goods and services
T or F the amount of money a person has to spend after needs are met is called discretionary income
T
