Chapter 3-Budgeting Flashcards
(16 cards)
Budget
A written cash flow plan
Reconcile
The act of matching your bank statement with your checkbook
Zero-Based Budget
A cash flow plan that assigns an expense to every dollar of your income, wherein the total income minus the total expenses equals zero
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Occurs when money is withdrawn from a bank account and the available balance goes to zero
Envelope System
Series of envelopes that are divided into categories and are used to store cash for planned monthly expenses
Cash Flow Statement
A summary that shows total income and spending for a given time period
Carbon Check
A copy of each check you write
What are the 7 wealth building habits?
1) Live on less than you make
2) Keep learning and finding ways to grow income
3) Write monthly budget
4) Plan your purchases
5) Stay out of Debt
6) Pay yourself 1st
7) Use gifts and extra income wisely
The number one cause to divorce in North America today is stress and disagreements over money.
True
Doing a budget does not:
Make overspending more likely
What are the reasons cash flow plans don’r always work?
- You leave things out
- Overcomplicate
- If you don’t write it, you don’t do it
Why is the Zero-Based budget the best method for budgeting?
Because you have a plan for every dollar
Why should you always have a cash flow plan?
It removes the management by crisis from your finances; managed money goes further because with a budget you are accounting for every dollar of your income
Describe the various payment options that come with a checking account.
- Debit Card
- Check
- Online Banking
Why is it important to maintain a file of both paper and electronic financial record?
- They’ll be useful for filing taxes
- Disputing bank errors
- Fraudulent purchases
- Accurate balance
