Chapter 3 Flashcards
Money management
Day to day financial activities necessary to manage current personal economic resources while working toward long term financial security
Safe deposit box
A private storage area at a financial institution with maximum security for valuables
Balance sheet
Financial statement that reports what an individual or a family owns and owes; also called a net worth statement
Assets
Cash and other property with a monetary value
Liquid assets
Cash and items of value that can easily be converted to cash
Liabilities
Amounts owed to others
Current liabilities
Debts that must be paid within a short time, usually less than a year
Long term liabilities
Debts that are not required to be paid in full until more than a year from now
Net worth
The difference between total assets and total liabilities
Insolvency
The inability to pay debts when they are due because liabilities far exceed the value of assets
Cash flow
Actual inflow and outflow of cash during a given time period
Cash flow statement
Financial statement that summarizes cash receipts and payments for a given period
Income
Inflows of cash to an individual or a household
Take home pay
Earnings after deductions for taxes and other items, also called net pay
Discretionary income
Money left over after paying for housing, food, and other necessities
