Chapter 8.1-Budgeting and Planning Flashcards
Most financial experts agree that families should set aside at least…percent of their disposable income each pay period
10
An orderly program for spending, saving, and investing the money you receive
Financial plan
Money remaining after expenses are paid
Discretionary income
A statement about a product’s qualities performance that the seller assures the buyer are true
Warranty
Items of value that a person owns
Assets
Expenses that remain constant and cannot be easily changed or removed from the budget
Fix expenses
Fixed expenses do not change; variable expenses change according to needs and short-term goals
True
When you owe more than you own
Insolvent
Expanses that may change according to needs and short-term goals
Variable expenses
Net worth is calculated by subtracting your variable expenses from your fixed expenses
False
A house payment are examples of
Fixed expenses
A major reason for financial planning is to prevent careless spending
True
Money you have to spend as you wish - after all required deductions
Disposable income
Receipts and documents showing income and expenses should be kept in a safe place because they are proof or evidence to use in the event of an audit
True
A personal property inventory is most commonly used for
Proof of loss from fire, theft, or property damage
Which of these is a liability? Car Car loans Stereo Savings account
Car loans
An organized plan whereby you match your expected income with expenses and savings
Budget
When your assets are not greater than your liabilities, you are said to be solvent, which is a good financial position
False
The IRS can audit your tax returns for a period of…years, except in the case of fraud, where there is no limit
Three
The most common purpose for a net worth statement is
Loan or credit application
Lunches, medical bills, personal care items, and clothing are all examples of
Variable expenses
Amounts of money owed to others
Liabilities
A person who promises to pay a note if the maker fails to pay
Co-signer
To prepare your personal budget, you should list sources of money you expect to receive, known as income
True
When you subtract your debts from the total amount of of things you own, the difference is
Net worth
When you own more than you owe
Solvent
