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Terms in this set (32)

Need
Something basic for your survival such as food, clothing , and shelter.
Want
Something you desire to make your life more comfortable.
Value
A belief or idea that you consider important or desireable.
Fixed Expenses
Expenses that do not change from one pay period to another and are in exact amounts
Financial Planning Process
The process of defining goals, developing a plan to achieve them, and putting the plan into action
Decision making
The process of considering and analyzing information related to personal and financial goals to determine an action to be taken.
Financial Planning Steps
(1) setting goals; (2) analyzing information; (3) creating a plan; (4) implementing the plan; and (5) monitoring and modifying the plan.
Decision making Steps
(1) Identifying the goal; (2) Gathering information; (3) Analyzing outcomes; (4) Examining alternatives; (5) Making a decision; and (6) Evaluating Results.
Cash Inflow
Money coming into an individual or net pay.
Goal
Specific statement of what you want to achieve, giving direction to your plan of action.
Assets
Things of value or something that you own, such as a car, stereo system, etc.
Short-Term Goal
One that is less than a 3-month time frame; focuses on immediate satisfaction
Medium Term Goal
One that focuses on a 3-month to 1-year period.
Long-Term Goal
One that focuses on more than 1 year of time and requires delayed gratification.
Delayed Gratification
The willingness to give up something you want now in return for something better later.
Variable Expenses
Change from time to time and you have more control over them.
Gross pay
The total amount of income from your wages or salary before payroll deductions.
Income
Any money coming in.
Liabilities
Money owed to creditors.
Money Management
How you handle money coming in and money going out.
Net income
Gross pay minus deductions
Net worth
Assets minus liabilities.
Personal Spending Record
Source records for keeping up with income and expenses.
Smart Goals
Ones that are specific, measurable, attainable, realistic and time-bound.
Opportunity cost
Choosing one option over another one.
Savings
Money you set aside for short-term goals.
Pay Yourself First
The setting aside of money for future use or other investments.
Balance Sheet
Provides a summary of one's financial condition. Hint, it is a listing of assets, liabilities and net worth (Assets minus Liabilities).
Budget
A plan for managing money during a given period of time and consists of savings and spending.
Cash flow statement
Simply a measure of the money you receive and the money you spend.
Discretionary Income
Money left over from net income after all expenses.
Expenditures
Money paid for goods and services.
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