Ch 7: Budgeting 101

Question 1

Active

Answer 1

money is very active… always moving & can be used in many ways

Question 2

ATM Card

Answer 2

automated teller card that allows you to make more transactions

Question 3

Budget

Answer 3

assigns every dollar to a specific expense before spending

Question 4

Carbon Check

Answer 4

copy of a check

Question 5

Currency

Answer 5

money

Question 6

Debit Card

Answer 6

card used to make purchases where money comes directly from out of the bank account

Question 7

Discipline

Answer 7

self control; key to wealth building

Question 8

Envelope System

Answer 8

money divided into envelopes for each specific category; discipline/budgeting tool

Question 9

Hoarding

Answer 9

keeping stuff and never getting rid of anything

Question 10

Impulse Purchase

Answer 10

making a purchase without thinking about it

Question 11

Persistent

Answer 11

never giving up

Question 12

Pro-Active

Answer 12

to have a strong initiative; you “happen to” your money instead of your money “happening” to you

Question 13

Procrastinate

Answer 13

put off until later

Question 14

Reconcile

Answer 14

to match bank statement with your checkbook

Question 15

Zero-based budget

Answer 15

a cash flow plan where every dollar has a name and the total income - the total expense=0

Question 16

What are bounced checks a sign of?

Answer 16

crisis living

Question 17

When should a written budget be done?

Answer 17

every month

Question 18

After receiving your bank statement, how long do you have to reconcile it?

Answer 18

72 hours

Question 19

Name some reasons why there would be a difference in balances in your checkbook registry and bank statement?

Answer 19

an error or omission, outstanding checks that didn’t clear, deposits that didn’t post

Question 20

What does a budget do?

Answer 20

stretch your money farther, make less arguments, shows you if you’re overspending in an area, removes guilt sometimes associated with purchases

Question 21

Explain how to complete a zero-based budget.

Answer 21

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

Question 22

Why do you need a written budget even when you know you can afford your expenses?

Answer 22

to make sure every dollar has a place because otherwise money “disappears”

Question 23

How does a budget differ when you have an irregular income vs. a predictable income?

Answer 23

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

Question 24

How can a budget help when trying to accomplish Baby Step 2?

Answer 24

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

Question 25

What does NSF mean?

Answer 25

Not Sufficient Funds

Question 26

Name four reasons people hate the word “budget”.

Answer 26

1. it has a straight jacket connotation
2. it has been used to abuse them
3. they’ve never had a budget that worked
4. paralysis from fear of what they would find

Question 27

Name 4 reasons that cash flow plans don’t work.

Answer 27

1. you leave things out
2. overcomplicate your plan
3. Don’t actually do it
4. Don’t actually live on it

Question 28

What do I need to balance my account?

Answer 28

account register, last bank statement, a reconciliation sheet (located on the back of most statements)