Dave Ramsey Chapter 3 Flashcards
Occurs when money is withdrawn from a bank account and the available balance goes below zero
overdraft
A cash flow plan that assigns an expense to every dollar of your income, wherein the total income minus the total expenses equals zero
zero-based budget
Series of envelopes that are divided into categories (food, entertainment, gas, etc.) 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
To match your bank statement with your checkbook
reconcile
A written cash flow plan
budget
Costs that do not change from month to month
fixed expenses
Any expenses that are not considered essential to the household or business.
discretionary expenses
A summary of all the income and outgo over a certain time period
cash flow statement
Your own record of all your transactions
check register
The equation to achieve a zero-based budget is:
income - expenses = zero
What are the consequences of overdrawing your checking account?
Overdraft fee, stress, and bounced check fee
Doing a budget does not:
make overspending more likely
Your monthly budget should include:
Fixed expenses, variable expenses, and discretionary expenses.
Car repairs are a:
Intermittent expense
The number one cause of divorce in North America today is stress and disagreements over money.
True
If you write a zero-based budget every month, it is not necessary to reconcile your account.
False
A debit card cannot be used for online purchases.
False
“Pay yourself first” means you should assign a portion of your income to saving and investing every month.
True
Setting up automatic account transfers is the easiest way to build your savings for your emergency fund or large purchases.
True
