Ch 7: Budgeting 101 Flashcards
Active
money is very active… always moving & can be used in many ways
ATM Card
automated teller card that allows you to make more transactions
Budget
assigns every dollar to a specific expense before spending
Carbon Check
copy of a check
Currency
money
Debit Card
card used to make purchases where money comes directly from out of the bank account
Discipline
self control; key to wealth building
Envelope System
money divided into envelopes for each specific category; discipline/budgeting tool
Hoarding
keeping stuff and never getting rid of anything
Impulse Purchase
making a purchase without thinking about it
Persistent
never giving up
Pro-Active
to have a strong initiative; you “happen to” your money instead of your money “happening” to you
Procrastinate
put off until later
Reconcile
to match bank statement with your checkbook
Zero-based budget
a cash flow plan where every dollar has a name and the total income - the total expense=0
What are bounced checks a sign of?
crisis living
When should a written budget be done?
every month
After receiving your bank statement, how long do you have to reconcile it?
72 hours
Name some reasons why there would be a difference in balances in your checkbook registry and bank statement?
an error or omission, outstanding checks that didn’t clear, deposits that didn’t post
What does a budget do?
stretch your money farther, make less arguments, shows you if you’re overspending in an area, removes guilt sometimes associated with purchases
Explain how to complete a zero-based budget.
Assign your money to each specific category you need then add up all of it that you have categorized & compare it to your monthly income, it should equal zero
Why do you need a written budget even when you know you can afford your expenses?
to make sure every dollar has a place because otherwise money “disappears”
How does a budget differ when you have an irregular income vs. a predictable income?
Instead of using the “Allocated Spending Plan”, you would use the “Irregular Income Planning” sheet. You will still use the “Monthly Cash Flow Plan” to see how much you need then if you make more than expected, then use the Irregular Income Sheet
How can a budget help when trying to accomplish Baby Step 2?
It shows you where your money is going so you can use the extra money that you aren’t spending unwisely to pay off your debt
What does NSF mean?
Not Sufficient Funds
Name four reasons people hate the word “budget”.
- it has a straight jacket connotation
- it has been used to abuse them
- they’ve never had a budget that worked
- paralysis from fear of what they would find
Name 4 reasons that cash flow plans don’t work.
- you leave things out
- overcomplicate your plan
- Don’t actually do it
- Don’t actually live on it
What do I need to balance my account?
account register, last bank statement, a reconciliation sheet (located on the back of most statements)
