Chapter Two Flashcards
Budget
a written plan for giving, saving, and spending
Income:
money received for work, as a gift, or through investments
Fixed Expense:
expense that remains the same from month to month
Intermittent Expense:
expense that occurs at various times throughout the year and tends to be in large, lump sums
Discretionary (Nonessential) Expense:
expense for things you don’t need
Zero-Based Budget:
a cash-flow plan that assigns an expense to every dollar of your income; the goal is for the total income minus the total expenses to equal zero
Net Income:
what a person earns after payroll taxes and other deductions are taken out; often referred to as take-home pay
Gross Income:
the amount you earn before taxes and other payroll deductions
Cash-Flow Statement:
a record that summarizes all of the income and outgo (spending) over a certain time period
Irregular Income:
income that comes in at different amounts or at different times, or both
Commission:
earnings based on a percentage of the sales made
Although the majority of Americans think budgeting is important, about______ of Americans actually use a budget.
35%
Which of the following is NOT a component of a budget?
Credit score
What are the Four Walls?
Food, utilities, shelter, and transportation
Online budgeting apps are more effective than budgeting with pen and paper. T/F
F
How often should you create a budget?
monthly
What does a budget show you?
How much money you plan to come in and go out during the month
How many months does it usually take for your budget to start working as a budget should?
three
Research shows that nearly half of Americans (46%) feel stress and anxiety about the amount of _______ they have.
personal debt
Going to the movies is an example of what types of expenses?
discretionary
The first priority in your budget should be
giving
Commission is when you make money based on the percentage of _____.
Total sales
What is the envelope system?
It’s a method of budgeting that uses envelopes labeled with specific budget categories for your cash.
