Personal Financial Management - Chapter 7 Flashcards
ATM card
Automated teller card which allows you to make transactions in ATMs
Active
Money - it’s always moving and can be utilized in many ways
Budget (2)
Plan for making and spending money
Another name for cash flow plan
Carbon checks
Checks that have a second copy behind them made of special paper which makes a copy of each check as you write them
Currency
Money
Debit card
A bank card that automatically deducts the amount of a purchase from the checking account of the cardholder
Discipline
Training to improve strength or self control
Envelope system (5)
A control system where an individual places the actual budgeted amount of cash into the specific envelope labeled for the expense
Breakdown of savings form
$2,000 in savings, then break it down
Consumer equity = what you own - what you owe
Can have negative equity
Hoarding
Reserving more than necessary
Impulse purchase
To buy an item without thinking about it
Persistent (2)
Not giving up
Continuing on
Pro-active
Controlling a situation by causing something to happen rather than waiting to respond to it after it happens - takes strong initiative
Procrastinate (2)
To delay
Put off until later
Reconcile (3)
To bring back into agreement
Process used to determine if the balance in your checking registry makes the balance reported on the bank statement
Reconcile your bank statement within 72 hours of reconciling it
Zero-based budget
Cash flow plan that assigns an expense to every dollar of one’s income, where in the total income minus the total expenses = zero
Irregular income form
Form used by persons earning an inconsistent monthly income
Monthly cash flow form
Form used to do a budget
Duplicate checks
Helps people who forget to record checks in their register after writing them
You do/don’t pay interest on debit card purchases?
You DONT pay interest on debit card purchases
How often does a budget change?
Every month
People who don’t earn a consistent salary monthly, are the ones…
who have a budget more than anyone
Balanced checks are a sign of…
Crisis living
Your monthly budget should include
Fixed expenses
What would account for a difference in balances in your checkbook registry and bank statement after reconciling the two? (3)
An error or omission
outstanding checks that didn’t clear
Deposits that didn’t post
How to do a budget (3)
Makes your $ go farther
Shows if you’re overspending
Removes guilt and shame sometimes associated with purchases
Reasons people hate budgets (4)
It has a straight jacket connotation
Has been used to abuse them
Never had a budget that worked
Paralysis from fear of what they might find
Cash flow plans don’t work when… (4)
You leave things out
Over complicate your plan
Don’t do it
Don’t live on it
What is the most easiest and most powerful plan?
Zero-based budget plan using the envelope system
How long does it take to get the envelope system all figured out?
3-4 months
