Unit 4 Vocabulary Personal Finance

Personal Balance Sheet

A balance sheet is the second type of personal financial statement. A personal balance sheet provides an overall snapshot of your wealth at a specific period in time. It is a summary of your assets (what you own), your liabilities (what you owe) and your net worth (assets minus liabilities).

Budget Variance

A budget variance is the difference between the budgeted or baseline amount of expense or revenue, and the actual amount. The budget variance is favorable when the actual revenue is higher than the budgetor when the actual expense is less than the budget.

Personal Financial Statement

A document or spreadsheet outlining an individual's financial position at a given point in time. A personal financial statement will typically include general information about the individual, such as name and address, along with a breakdown of their total assets and liabilities.

Budget

A plan for using money wisely.

Insolvent

A situation where the value of a company's liabilities exceeds its assets. Accounting insolvency looks only at the firm's balance sheet, deeming a company "insolvent on the books" when its net worth appears negative.

Variable Expenses

An expense that does change from one period to the next.

Fixed Expenses

An expense that does not change from one period to the next

Surplus

Financial situations that occurs when less money is spent than earned.

Deficit

Financial situations that occurs when more money is spent than earned.

Money Management

Is planning how to get the most from your money.

Liquid Assets

Liquid assets include items such as accounts receivable, demand and time deposits, gilt edged securities. In some countries, precious metals (usually gold and silver) are also considered liquid assets.

Expenses (Cash Outflow)

Money spent on an item purchased or used

Net worth

Net worth (sometimes called net or wealth) is the total assets minus total outside liabilities of an individual or a company. Net worth is used when talking about the value of a company or in personal finance for an individual's net economic position. Put another way, net worth is any asset owned minus any debt owed.

Income (Cash Inflow)

Operating cash flows are those related to a company's operations, that is, its day-to-day business. ... Free cash flow is defined as a company's operating cash flow minus capital expenditures. This is the money that can be used to pay dividends, buy back stock, pay off debt and expand the business.

Solvent

While solvency represents a company's ability to meet long-term obligations, liquidity represents a company's ability to meet its short-term obligations.

Wealth

an abundance of valuable possessions or money.

Real Estate

property consisting of land or buildings.

Assets

property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.

Market Value

the amount for which something can be sold on a given market.

Take-home pay

the pay received by an employee after the deduction of taxes and other obligations.

Liabilities

the state of being responsible for something, especially by law

Cash Flow

the total amount of money being transferred into and out of a business, especially as affecting liquidity.

Safety-deposit box

usually located inside a bank - which is used to store valuables. A safe deposit box is rented from the institution and can be accessed with keys, pin numbers or some other security pass.