Personal Finance Chapter 3 VOCAB

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 dollars a year or less.

Personal financial statements

documents that provide information about you current financial position and present a summary of you income and spending.

Balance sheet

also called a net worth statement is a financial statement that lists the items of value that you own, the debts that you own, and your net worth

Net worth

The difference between the assets (money you have) and the debts that you owe.

Assets

Any items of value that you own, including cash, property, personal possessions, and investments

Liquid assets

Cash and items that can be quickly converted to cash

Real Estate

land that a person or family owns and anything that is on it, such as a house

Market value

the price at which you could sell the property

Liabilities

debts that you owe

Insolvency

the condition that occurs if your liabilities are greater than your assets

Cash flow

the money that actually goes into and out of your wallet and bank accounts

Income

The money that you receive

Take home pay

Or net pay is the amount of income left after taxes and other deductions are taken out of your gross pay

Discretionary income

the money left over after you have paid for the essentials (food, clothing, medication, shelter and transportation)

surplus

extra money that can be spent or saved

deficit

the situation that occurs if you spend more money tan you earn or receive

Budget

a plan for using your money in a way that best meets your wants and needs

Consumer Price Index

a measure of the changes in prices for commonly purchased goods and services in the US

Budget variance

Difference between the budgeted amount and the actual amount that you spend