Personal Finance Test 3

reconcile the act of matching your bank statement with your checkbook
impulse purchase an item that is bought without previous planning or consideration of the long term effects
cash flow statement a summary that shows total income and spending for a given time period
budget A written cash flow plan
zero-based budget A cash flow plan that assigns an expense to every dollar of uyour income, wherin the total income minus the total expenses equals zero
envelope system Series of e envelopes that are divided into categories (food, entertainment, gas, etc.) and are used to store cash for planned monthly expenses
carbon check A copy of each check you write
overdraft Occurs when money is withdrawn from the bank account and the available balance goes below zero
The number one cause of divorce in America today is stress and disagreement over money? True
The envelope system works great for managing spending on thing that don’t normally have a fixed monthly expense True
Which of the following is a consequence of overdrawing your checking account?a. overdraft fee from your bankb. bounced check fee from the storec. stress from money mismanagementd. all of the above D. All of the above
Doing a budget does not:a. make your money go furtherb. make overspending more likelyc. show if you are overspending in an aread. remove guilt and shame sometimes associated with purchases B. make overspending more likely
Your monthly budget should include:a. fixed expensesb. variable expensesc. discretionary expensesd. all of the above D. all of the above
What are reasons cash flow plans sometimes don’t work? People don’t follow them, or they might not be reasonable
Why is the zero-based budget the based method of budgeting? It’s a plan for all your money
Explain why you should always have a cash flow plan? To help regulate spending, and it helps remove crisis, shame, guilt, and stress of spending.
Describe the various payment options that come with a checking account? Write a check, use your debit card, online bill pay, and mobile banking.
Why is it important to maintain a file of both paper and electronic financial records? Electronic can crash, so you always have a back-up.

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