Chapter 2 Vocabulary

Question 1

Define: Income and Expense Statement

Answer 1

A record of your family’s past cash inflows and outflows over a specified period of time.

Question 2

Define: Fixed Expenses

Answer 2

Expenditures that your family has little direct control over and that do not often change from month to month.

Question 3

Define: Variable Expenses

Answer 3

Expenditures that your family controls and that may vary from month to month.

Question 4

Define: Net Worth Statement

Answer 4

A snapshot of your family’s total assets minus your total liabilities on a particular day.

Question 5

Define: Liabilities

Answer 5

Synonymous with debt, calculated by adding up the outstanding balances on any current and long-term family debts.

Question 6

Define: Assets

Answer 6

The monetary value of what your family owns that could be turned into cash.

Question 7

Define: Current Market Value

Answer 7

The price at which your family’s asset could be sold in the present market environment.

Question 8

Define: Budget

Answer 8

A spending plan in which family income is allocated to specific categories of expenditures.

Question 9

Define: SMART Principle

Answer 9

Family goals should be:

Specific
Measurable
Attainable
Relevant
Time-bound

Question 10

Define: Miscellaneous

Answer 10

One of your budget’s most important, but often neglected, categories; a generous catch-all category for those unexpected expenses which find the holes in your budget.

Question 11

Define: Mad Money

Answer 11

A certain amount of funds allocated to each spouse, for which they are not accountable to the other spouse.

Question 12

Define: HALT Principle

Answer 12

Avoid making purchases or financial decisions when you are:

Hungry
Angry
Lonely
Tired