Chapter 3 Notes Flashcards
automated teller card which allows you to make transactions in automated teller machines
ATM card
a written cash flow plan
budget
a copy of each check you write
carbon check/ duplicate checks
type of card issued by a bank and used to make purchases; unlike a credit card the money comes directly from a checking account
debit card
series of envelopes that are divided into categories and are used to store cash for planned monthly expenses
envelope system
an item that is bought without previous planning or consideration of the long-term effects
impulse purchase
a cash flow plan that assigns an expense to every dollar of your income where in the total income minus the total expenses equals 0
zero-based budget
a person or organization that uses a product or service
consumer
money
currency
broadly refers to not being current on your payments
delinquency
amount of money left over after all necessities and expenses are paid
disposable income
sume of money ear-marked for ongoing living expenses at retirement or when employment income otherwise stops
nest egg
the amount of money one has available after taxes have been taken out of their pay; total wage, salary, commissions, and or bonuses minus payroll deductions
take home pay
feeling regret or concern after making a large purchase
buyer’s remorse
occurs when money is withdrawn from a bank account and the available balance goes below zero
overdraft
NSF
non-sufficient funds; when you do not have enough money in your account to cover checks you have written or the use of your debit card
3 reasons for not using a budget
- straitjacket connotation- it restricts us or confines us in our spending 2. the budget has been used to abuse them (feel penalized or punished) 3. we never had one that really worked 4. paralysis from fear of what we’ll find
using envelopes for a particular category and putting the money in that particular envelope
envelope system
3 tips for sticking to a budget
- write it down 2. use the envelope system 3. stay away from places that tempt you to spend money
expenses for things that we don’t need
blow money or discretionary income
income that comes in beyond what is expected
irregular income
3 components of a budget
- fixed expenses 2. a variable expense 3. discretionary expenses
to reconcile your checking account means to
balance your account
doing a budget does not
make overspending more likely (makes it less likely)
3 budget truths
- a budget is a written plan for saving and spending 2. cash flow statement reflects what has already taken place 3. the cash flow summarizes income and spending
4 typical millionaire habits
- do not buy on impulse 2. do not carry debt 3. don’t associate with people who waste money 4. don’t spend more than you make
eating out is a _______ expense
flexible
written budget (if followed) removes
overspending, guilt, and crisis management
budgeting with an irregular income
- prioritize your expenses 2. list the expenses a month in advance 3. when a check comes in spend the money all the way down the list
examples of record keeping features from your bank
- an account register 2. get a monthly statement 3. a reconciliation sheet
account having the most current balance
account register (your personal record)
“POS”
point of sale- shows where your debit transaction takes place
average person in the US makes _______ a year
$40,000
it takes ___ months or ___ days to figure out how to budget correctly (trial and error process)
3
90
open first checking account between ____ and ___ years old
13
15
typical overdraft fee is
$35
overdrafts are a sign of
crisis living
expenses that come up at various and unexpected times
intermittent expenses
the four walls (during crisis management) PRIORITIZE
- food 2. shelter 3. utilities 4. clothing and transportation
the average American spends _____ for every dollar earned
$1.33
