unit 3: budgeting Flashcards
budget definition:
a written cash flow plan
cash flow statement:
a summary that shows total income and spending for a given time period
envelope system:
series of envelopes that are divided into categories (food, entertainment, gas, etc.) and are used to to store cash for planned monthly expenses
impulse purchase:
an item that is bought without previous planning or consideration of the long-term effects
overdraft:
occurs when money is withdrawn from a bank account and the available balance goes below zero
reconcile:
to match your bank statement with your checkbook
zero-based budget:
a cash flow plan that assigns an expense to every dollar of your income, where in the total income minus the total income minus total expenses equal zero
budgeting is ____ to your success. Your income is you ____!
important; responsibility
what do millionaires not do?
- buy brand new cars
- carry debt
- buy brand named clothes
- desire instant gratification
-replace what is not broken - eat out on regular basis
4 reasons people avoid budgeting:
- straitjacket connotation
- abuse
- never worked
- fear
straitjacket connotation:
believe that a budget will constrict and keep them from doing what they want
abuse:
budget has been used by other (parents, spouse) to abuse them. Stating “It’s not in the budget!”
never-worked:
budgets are not perfect, you will make mistakes. It takes time (months) to get your budget where you want it
fear:
some people are afraid to look at their finances, because they know what they will find. Ignoring financial distress only allows the problem to get bigger
writing checks:
used for paying bills at stores or paying someone without giving cash