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