Personal Finance Chapter 3

money management planning how to get the most from your money
safe-deposit box a small, secure storage compartment that you can rent in a bank, usually for $100 a year or less
personal financial statement a document that provides information about an individual’s current financial position and presents a summary of income and spending
personal balance sheet also called a net worth statement; a financial statement that lists items of value owned, debts owed, and a person’s net worth
net worth the difference between the amount that you own and the debts that you owe
assets any items of value that an individual or company owns, including cash, property, personal possessions, and investments
wealth an abundance of valuable material possessions or resources
liquid assets cash and items that can be quickly converted to cash
real estate land and any structures that are on it that a person or family owns
market value the price at which property would sell
liabilities the debts that you owe
insolvency a financial state that occurs if liabilities are greater than assets
cash flow the money that actually goes into and out of your wallet and bank accounts
income the money you receive
take-home pay the amount of income left after taxes and other deductions are taken out of your gross pay
discretionary income the money left over after paying for the essentials—food, shelter, clothing, transportation, and medication
surplus extra money that can be spent or saved, depending on a person’s financial goals and values
deficit the financial situation that occurs when more money is spent than is earned or received
budget a plan for using money to meet wants and needs
consumer price index (CPI) a measure of the changes in prices for commonly purchased goods and services in the United States
budget variance the difference between the budgeted amount and the actual amount that you spend

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