F260 Chapter 2

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  1. Money management.
    refers to the day-to-day financial activities necessary to manage current personal economic resources while working toward long-term financial security
  2. A safe deposit box
    is a private storage area at a financial institution with maximum security for valuables and difficult-to-replace documents.
  3. A balance sheet
    also called a net worth statement or statement of financial position, reports what you own and what you owe. You prepare a personal balance sheet to determine your current financial position using the following process:
  4. Assets
    are cash and other tangible property with a monetary value. The balance sheet for Sandra and Mark Scott lists their assets in four categories:
  5. Liquid assets
    are cash and items of value that can easily be converted to cash:
  6. liabilities
    amount that is owed to others (credit car debit, morgage, etc.)
  7. Current liabilities
    are debts you must pay within a short time, usually less than a year
  8. Long-term liabilities
    are debts you do not have to pay in full until more than a year from now. Common long-term liabilities include auto loans, educational loans, and mortgages
  9. net worth
    is the difference between total assets and total liabilities
  10. Insolvency
    is the inability to pay debts when they are due; it occurs when a person's liabilities far exceed available assets.
  11. Cash flow
    is the actual inflow and outflow of cash during a given time period
  12. A cash flow statement
    , also called a personal income and expenditure statement (Exhibit 2–3), is a summary of cash receipts and payments for a given period, such as a month or a year
  13. Take-home pay
    also called net pay, is a person's earnings after deductions for taxes and other items
  14. Discretionary income
    is money left over after paying for housing, food, and other necessities
  15. fixed expenses
    are payments that do not vary from month to month. Rent or mortgage payments, installment loan payments, cable/Internet service, and a monthly train ticket for commuting to work are examples of constant or fixed cash outflows
  16. Variable expenses
    are flexible payments that change from month to month. Common examples of variable cash outflows are food, clothing, utilities (such as electricity and telephone), recreation, medical expenses, gifts, and donations
  17. A budget
    or spending plan, is necessary for successful financial planning. The common financial problems of overusing credit, lacking a regular savings program
  18. SMART
    SMART approach with goals that are Specific, Measurable, Action-oriented, Realistic, and Time-based
  19. deficit
    The amount by which actual spending exceeds planned spending.
  20. surplus
    if their actual spending had been less than they had planned.
Author:
lightedcaboose
ID:
314607
Card Set:
F260 Chapter 2
Updated:
2016-01-24 21:39:50
Tags:
Person Finance 2016 Kelley School Business McGraw Hill Focus Personal Indiana Universtiy
Folders:
F260: Personal Finance
Description:
Note cards for Chapter 2 of Focus on Personal Finance for F260 at Indiana University
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