MODULE 2

Question 1

Budget Meaning

Answer 1

A budget refers to an estimation of income and expenses that’s made for a specified future period
of time. (Ganti, 2024)

Question 2

Budgeting Meaning

Answer 2

Budgeting refers to process of crafting plan for income generation and where to spend their
income covering a specific period of time.
Having a budget helps a person and household in managing their finances.

Question 3

Income

Answer 3

Income refers to the expected money that you will receive in a specific period
of time.

Question 4

Expenses

Answer 4

Expenses refers to the money that you spend over a specific period of time

Question 5

Net Cash Flow

Answer 5

Net Cash Flow refers to the result when you subtract your expenses to your income. If the result is positive it means that you have more income generated
compared to the expenses that you have incurred. If the result is negative it
means that you incur more expenses that your income.
The result of the subtraction will provide a good basis if you need to adjust on
your activities especially on your spending

Question 6

Active Income

Answer 6

Money received in exchange for providing a service

Ex: compensation, allowance, scholarship stipend

Question 7

Passive Income

Answer 7

Money received on a consistent basis with minimal effort

Ex: stocks and bonds
savings

Question 8

Fixed Expenses

Answer 8

Same cost every month regardless of the situation

Ex: water expense

Question 9

Variable Expenses

Answer 9

A cost that varies according to the situation

Ex: Food allocation, Transportation

Question 10

Mixed Cost

Answer 10

in a company, a portion is fixed and a portion is variable cost

Ex: utilities have maximum cubic meter, if the consumption exceeds that limit, the additional payment will be the variable cost which will be added to fixed cost

Question 11

Net Cash Flow Formula

Answer 11

Total Income- Total Expenditure

Question 12

Negative Net Cash Flow

Answer 12

Undesirable in long term

Question 13

What to do if you have negative cash flow

Answer 13

1. Increase active income (part time work)
2. Eliminate lifestyle expenses (subscription service)
3. Control variable expenses (opt for substitute goods)

Question 14

Positive Net Cashflow

Answer 14

achieve your financial goals

Question 15

What to do if you have a positive net cash flow?

Answer 15

1. Build an emergency fund (3-6 months expenses)
2. Create a well-defined financial plan
3. Review goals and sustainability (are you taking on too much risk?)

Question 16

Common Steps in Budgeting

Answer 16

Estimate income, or what you expect to receive;
2. Estimate the present and future spending;
3. Deduct the estimated expenses to the income and determine the net cash
flow.

Question 17

Types of Budget Plan

Answer 17

Envelope Method
Zero- Based Budgeting
50-30-20 Method
Pay yourself first
Values Based Budget

Question 18

Envelope Method

Answer 18

This method categorize the main expenses. The money is placed inside an
envelope. The envelope contains the maximum amount of money that you can
spend for each of the category of your expenses. You cannot more than the
amount in the envelope. If you will have an amount of money you cannot move
the funds for other expenses. If there is money left you can put it into savings and
do not use it next month.

Question 19

Zero- Based Budgeting

Answer 19

The assumption in the allocation is that there will be no penny that will be left all of it
is already assigned to specific expense or purpose.

After determining the income, allocate every single penny to various purpose.

Question 20

50-30-20 Method

Answer 20

The allocation is 50% of income goes to “needs“; the 30% is for the “wants” and 20%
will be for the savings and paying of debts if there are any.

Question 21

Pay yourself first

Answer 21

The first thing that you do is to allocate for savings— it means that you pay yourself.
After this, you can now employ 20/50/30 budget. The 20 is now for savings and the
50 will be for needs and 30 for wants or you can use envelopes; or you can allocate
all other revenue to other expenses after you have already allocated for savings.

Question 22

Values Based Budget

Answer 22

The allocation will first consider the essentials or your needs. Then the
allocation will now be allocated to the items that are deemed
important to you such as charity, family, friends, education etc. You
can use the other methods based on the values that determines
your needs and wants. But always remember to include your future
to meet your personal and financial goals.

Question 23

A+B= C Model

Answer 23

A- Activating Event Triggers emotions
B- Belief how the A makes you feel
C- Consequences refers to the response

Question 24

If the C is positive, ____
If the C is negative, ____

Answer 24

If the C is positive try to replicate
If C is negative then try to analyze what are you doing; the goal is to control your
emotions and response that would decrease negative consequences in the future.
Think about your money and how you spend your money.

Question 25

Bolton (2021) Model

Answer 25

Recognize- Analyze- Think- Plan- Commit- Improve

Question 26

11 Budgeting Myths

Answer 26

1. I Don’t Need to Budget
2. I’m Not Great at Math
3. My Job is Secure
4. Unemployment Insurance will tide me over
5. I Don’t Want to Deprive Myself
6. I Don’t Want Anything Big
7. I wont Qualify for Student Financial Aid
8. I’m Debt- Free
9. I always Get a Raise or Tax Refund
10. I Just Don’t Have the Discipline
    11.It’s Luxury When I barely Have Enough for the Essentials