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Intro to Business > 16.2 budgeting techiniques > Flashcards

16.2 budgeting techiniques Flashcards

1
Q

What statement can help you develop budget categories?

A

cash flow statement

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2
Q

for a budget to be _____, it must be followed

A

for a budget to be successful, it must be followed

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3
Q

Mary and Fred budgeted $340 a month for groceries. During the month, they spent $87, $93, $38, $61, and $52 at the supermarket.

  1. what was the total amount spent for food?
  2. did mary and fred have a budget deficit or surplus?
  3. What was the amount?
A
  1. 87+93+38+61+52 = $331
  2. surplus because they spent LESS than what they budgeted
  3. $340-331 = $9
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4
Q

name some examples of fixed expenses

A
  • rent
  • mortgage
  • payments
  • insurance premiums
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5
Q

What goes under a clothing budget category?

A
  • clothes
  • shoes
  • dry cleaning
  • clothing repairs
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6
Q

a good ____ should take very little of your time, but it should provide needed information on your spending and savings plans

A

a good budget should take very little of your time, but it should provide needed information on your spending and savings plan

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7
Q

spending is greater than planned spending

A

deficit

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8
Q

a ____ allows you to meet your personal goals with a system of saving and wise spending

A

a budget allows you to meet your personal goals with a system of saving and wise spending

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9
Q

What are 5 common characteristics of a successful budget?

A
  1. realistic - should reflect current income and planned spending
  2. flexible - when unexpected expenses arise, our spending plan should be able to adapt for these costs
  3. should be evaluated regularly - everye few months, evaluate the budget to determine if its still appropriate
  4. well planned and clearly communicated - all family members should discuss financial goals, wants and needs and plans for spending
  5. simple format - if its too detailed and difficult to understand, family members may not be willing to use the spending plan
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10
Q

the most uncertain aspect of the budgeting process involves

  • estimating variable expenses
  • determining net worth
  • estimating fixed expenses
  • setting financial goals
A

estimating variable expenses

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11
Q

Most financial advisers recommend that an amount be set aside for _____ as the first part of the budget

A

savings

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12
Q

What goes under a household budget category?

A
  • rent
  • mortgage
  • property taxes
  • insurance
  • utilities
  • furnishings
  • household supplies
  • household repairs
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13
Q

What goes under a savings budget category?

A
  • savings accounts
  • government bonds
  • stocks
  • other investments
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14
Q

What goes under a food budget category?

A
  • food eaten at home
  • meals eaten out / away from home
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15
Q

what type of expenses may not be easy to estimate?

A

variable expenses

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16
Q

What goes under a gifts and contributions budget category?

A
  • charitable contributions (church, red cross, etc)
  • personal gifts
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17
Q

name some examples of variable expenses

A
  • food
  • clothing
  • utilities
  • medical and dental costs
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18
Q

the amount of money you plan to use for a certain budget category

A

allowance

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19
Q

What is the SMART approach for financial goals?

A
  • S - specific: make the goals specific so you know exactly what you want to achieve
  • M - measurable: make the goals measurable so that you know the specific amount to save
  • A - action oriented: make the goals action oriented so that you know what actiosn you need to take
  • R - realistic: make the goals realistic based on your income
  • T- time based: make the goals time based so that you have a time frame for achieving them
20
Q

What are advantages of a handwritten budget?

A
  • it’s inexpensive - all you need is pencil, paper and calculator
  • can use spreadsheet to help with calculations
  • this kind is good for people with a single sources of income and a few expenses
21
Q

having a written _____ is a key part of successful money management

A

having a written budget is a key part of successful money management

22
Q

money management software, cell phone ____, and financial websites offer budgeting tools

A

money management software, cell phone apps and financial websites offer budgeting tools

23
Q

What goes under a health and personal care budget category?

A
  • medical and dental expenses
  • medications
  • eyeglasses
  • health insurance
  • personal care costs
24
Q

a major purpose of a budget is to

  • assist with comparison shopping
  • achiever financial goals
  • reduce a person’s enjoyment of life
  • gather date for using credit cards
A

achieve financial goals

25
Q

a variance in the actual amount spent and the budgetd amount ____ (does/does not) always mean a change in yrou spending plan is necessary

A

does not

your budgeted amount may still be appropriate with a slight deficit or surplus occurring every few months in some categories

26
Q

What goes under a transportation budget category?

A
  • auto payments
  • car insurance
  • operating costs (gas, oil, etc)
  • maintenance (oil change, tune up)
  • repairs (dead battery, etc)
  • public transportation (if they take bus or subway, etc)
27
Q

What does the planned spending amount for a budget category depend on?

A
  • income
  • family size
  • ages of children
  • cost of living in your area
  • work related expenses
  • personal values
  • personal needs
  • personal goals
28
Q

costs that occur on a regular basis and are for the same amount each time

A

fixed expenses

29
Q

Why is using a checkbook register and bank statements as a budget not a good idea?

A

these documents allow the user to pay bills and monitor deposits and balances which is good, but there is no mechanism for financial planning which is bad

30
Q

What was a once popular system for family budgeting? What was the downfall?

A
  • envelopes marked with labels of different expenses like food, housing or automobile had the budgeted amount of money for each category in the envelope then the expenses were paid from the money in the envelope
  • downfall - large amounts of cash left at home can be stolen
31
Q

actual spending is less than the budgeted amount

A

surplus

32
Q

the amount budgeted for savings and other expenditures is referred to as an ______

A

allowance

33
Q

What goes under a recreation and education budget category?

A
  • books and other reading materials
  • theater tickets
  • concerts
  • vacations
  • school expenses
  • hobbies
  • club dues
34
Q

true or false

retirement planning isusually considered a short term goal

A

false

is a long term goal

35
Q

What are the 8 main divisions are commonly used as budget categories?

A
  1. savings
  2. food
  3. clothing
  4. household
  5. transportation
  6. health and personal care
  7. recreation and education
  8. gifts and contributions
36
Q

if you expect necessary higher or lower spending in a certain category, a _____ in your budget is probably needed

A

if you expect necessary higher or lower spending in a certain category, a change in your budget is probably needed

37
Q

a category by category comparison allows you to find areas where ____ in the budget may be appropriate

A

a category by category comparison allows you to find areas where changes in the budget may be appropriate

38
Q

What are the 4 main steps of creating and using a budget?

A
  1. set financial goals
  2. plan budget categories
  3. maintain financial records
  4. evaluate your budget
39
Q

on a budget, any difference between the actual spending and budgeted amount

A

budget variance

40
Q

What will having a plan for saving help you do / what are the main purposes of a budget?

A
  • live within your income
  • make wise buying decisions
  • avoid credit problems
  • plan for financial emergencies
  • develop money management skills
  • achieve your financial goals
41
Q

living costs that differ each time

A

variable expenses

42
Q

a good budgeting system allows the user to develop a budget, track expenses, and pay _____

A

bills

43
Q

after planning a budget, individuals and families should record their income and expenses to find out if the plan is _____

A

working

44
Q

Is keeping a budget only in your head a good idea?

A
  • no because mistakes can happen very easily
  • mistakes are greatly reduced when budget info is documented on paper or in an electronic file
45
Q

After savings, what are the 2 types of living expenses that must be considered for the budget?

A

fixed expenses & variable expenses

Intro to Business (41 decks)

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