the steps in preparing a practical budget in order |
Set financial goals, Estimate your income, budget for unexpected expenses, Budget for fixed expenses, budget for variable expenses, Record what you spend, review spending or saving patterns, |
Consumer price index |
a measure of the changes in prices for commonly purchased goods and services in the United States. |
Personal financial statement |
a document that provides information about an individual’s current financial position and presents a summary of income and spending. |
Net worth |
the difference between the amount that you own and the debts that you owe. |
liquid assets |
cash and items that can be quickly converted to cash |
liabilities |
Debts that you owe |
cash flow |
The money that actually goes into and out of your wallet and bank accounts. |
budget |
Plan for using money to meet wants and needs. |
budget variance |
the difference between the budgeted amount and the actual amount that you spend. |
insolvency |
financial state that occurs if liabilities are greater than assets. |
money management |
Planning how to get the most from your money. |
safe deposit box |
A small, secure compartment that you can rent in a bank, usually for $100 a year or less. |
Personal balance sheet |
a financial statement that lists items of value owned, debts owed, and a person’s net worth. |
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. |
real estate |
land and any structures that are on it, such as a house or any other building that a person or family owns. |
market value |
The price at which property would sell. |
income |
The money that you receive |
Discretionary income |
the money left over after paying for the essentials, such as food, clothing, shelter, transportation, and medication. |
Take home pay |
the amount of income left after taxes and other deductions are taken out of your gross pay. |
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. |