Chp 7 Flashcards
What must you do every month?
do a written cash flow plan
what must you do with your checkbook?
keep it balanced
What are overdrafts a sign of?
crisis living, sloppy lazy money habits
What are sure to become budget busters if not managed properly?
ATM card, Debit card
Why do people hate the word budget?
it has a straight jacket connotation
it has been used to abuse them
the budget has never worked
fear of what they will find.
Why do cash flow plans not work?
people leave things out
overcomplicate the plan
don’t actually do it
don’t live on the budget
What will a written plan, if lived and agreed on remove?
money fights
guilt, shame, and fear with buying necessities
overdrafts from life, and stress
overspending in certain areas.
What is the easiest and most powerful plan?
zero-based budget plan using an envelope system
how long does it take to get a budget right?
3-4 months
how do you budget with an irregular income?
make a list of all expenses
prioritize the list by importance
spend your money on the way down the list till you reach zero.
What are lump sum payments?
payments on a non-monthly basis (taxes, insurance)
What must you do with lump-sum payments?
annulize the cost. convert the total cost into monthly payments
What should happen in a monthly cash flow plan?
every single dollar of your income should be allocated to some category.
What things should you not forget to add to your budget?
clothes, car repairs, home improvements
What should you do if one of your categories is coming up short for several months?
adjust the budget amount the next month
what is the recommended amount for food?
5-15%
What category should have the most percentage of your pay?
housing
What does an allocated spending plan do?
it comes after you’ve done a monthly cash flow plan and allocated the rest of your money from each pay period.
What do the 4 columns on an allocated spending plan represent?
4 weeks in a given month
How do you allocate expenses in an allocated pay plan?
add them to a specific payday column using bill dues to guide you.
How do you fill out an allocated spending plan?
write down pay periods, allocate money to specific categories based on bill dues, subtract each category as you go down the list till you reach zero.
How do you fill out a monthly cash flow plan?
fill in monthly expenses under subcategories, add them up in total. use actually spent to record what you really spent to see needed adjustments and record what percentage of pay goes into this category.
What should you not use if you have an irregular income?
allocated spending plan
What should you still use even with an irregular income?
monthly cash flow plan
How should you fill out an irregular income form?
prioritize expenses by importance, write down the amount for each expense and the accumulative amount in the second column.
