Chapter 3 Notes

Question 1

automated teller card which allows you to make transactions in automated teller machines

Answer 1

ATM card

Question 2

a written cash flow plan

Answer 2

budget

Question 3

a copy of each check you write

Answer 3

carbon check/ duplicate checks

Question 4

type of card issued by a bank and used to make purchases; unlike a credit card the money comes directly from a checking account

Answer 4

debit card

Question 5

series of envelopes that are divided into categories and are used to store cash for planned monthly expenses

Answer 5

envelope system

Question 6

an item that is bought without previous planning or consideration of the long-term effects

Answer 6

impulse purchase

Question 7

a cash flow plan that assigns an expense to every dollar of your income where in the total income minus the total expenses equals 0

Answer 7

zero-based budget

Question 8

a person or organization that uses a product or service

Answer 8

consumer

Question 9

money

Answer 9

currency

Question 10

broadly refers to not being current on your payments

Answer 10

delinquency

Question 11

amount of money left over after all necessities and expenses are paid

Answer 11

disposable income

Question 12

sume of money ear-marked for ongoing living expenses at retirement or when employment income otherwise stops

Answer 12

nest egg

Question 13

the amount of money one has available after taxes have been taken out of their pay; total wage, salary, commissions, and or bonuses minus payroll deductions

Answer 13

take home pay

Question 14

feeling regret or concern after making a large purchase

Answer 14

buyer’s remorse

Question 15

occurs when money is withdrawn from a bank account and the available balance goes below zero

Answer 15

overdraft

Question 16

NSF

Answer 16

non-sufficient funds; when you do not have enough money in your account to cover checks you have written or the use of your debit card

Question 17

3 reasons for not using a budget

Answer 17

1. straitjacket connotation- it restricts us or confines us in our spending 2. the budget has been used to abuse them (feel penalized or punished) 3. we never had one that really worked 4. paralysis from fear of what we’ll find

Question 18

using envelopes for a particular category and putting the money in that particular envelope

Answer 18

envelope system

Question 19

3 tips for sticking to a budget

Answer 19

1. write it down 2. use the envelope system 3. stay away from places that tempt you to spend money

Question 20

expenses for things that we don’t need

Answer 20

blow money or discretionary income

Question 21

income that comes in beyond what is expected

Answer 21

irregular income

Question 22

3 components of a budget

Answer 22

1. fixed expenses 2. a variable expense 3. discretionary expenses

Question 23

to reconcile your checking account means to

Answer 23

balance your account

Question 24

doing a budget does not

Answer 24

make overspending more likely (makes it less likely)

Question 25

3 budget truths

Answer 25

1. a budget is a written plan for saving and spending 2. cash flow statement reflects what has already taken place 3. the cash flow summarizes income and spending

Question 26

4 typical millionaire habits

Answer 26

1. do not buy on impulse 2. do not carry debt 3. don’t associate with people who waste money 4. don’t spend more than you make

Question 27

eating out is a _______ expense

Answer 27

flexible

Question 28

written budget (if followed) removes

Answer 28

overspending, guilt, and crisis management

Question 29

budgeting with an irregular income

Answer 29

1. prioritize your expenses 2. list the expenses a month in advance 3. when a check comes in spend the money all the way down the list

Question 30

examples of record keeping features from your bank

Answer 30

1. an account register 2. get a monthly statement 3. a reconciliation sheet

Question 31

account having the most current balance

Answer 31

account register (your personal record)

Question 32

“POS”

Answer 32

point of sale- shows where your debit transaction takes place

Question 33

average person in the US makes _______ a year

Answer 33

$40,000

Question 34

it takes ___ months or ___ days to figure out how to budget correctly (trial and error process)

Answer 34

3

90

Question 35

open first checking account between ____ and ___ years old

Answer 35

13

15

Question 36

typical overdraft fee is

Answer 36

$35

Question 37

overdrafts are a sign of

Answer 37

crisis living

Question 38

expenses that come up at various and unexpected times

Answer 38

intermittent expenses

Question 39

the four walls (during crisis management) PRIORITIZE

Answer 39

1. food 2. shelter 3. utilities 4. clothing and transportation

Question 40

the average American spends _____ for every dollar earned

Answer 40

$1.33