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Content Vocabulary: Personal Finance

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Assets – An asset is anything that is owned by an individual. With respect to saving and investing, assets are generally categorized as liquid (cash) assets and capital (investment) assets Balanced Budget – A situation where income and expenses are equal

Budget surplus – A situation where money is left over after all obligations have been paid Budget deficit – A situation where there is not enough money to cover expenses

Budget – An organized plan for saving and spending based on your expected income and expenses

Cash flow – Typically used to measure the health of a business, it calculates income minus expenses

Comparison shop – Checking several alternatives to find the best product at the best price Disposable income –The money you have to spend or save as you wish after taxes, social security, and other required and optional deductions have been withheld from your gross pay Emergency Fund – An amount of money set aside to cover bills in case of emergency

Expenses – The things people pay for with their money

Financial Plan – A plan of action that allows a person to meet not only the immediate needs but also the long-term goals

Fixed expenses – Expenses that remain the same each month

Flexible expenses – Expenditures that change each month and can be reduced or eliminated if necessary

Impulse spending – Making purchases without comparing costs or benefits beforehand

Income – Money earned in exchange for work, or received from investments, allowance, or gifts

Investing – The process of setting money aside to increase wealth over time and accumulate funds for long-term financial goals such as retirement

Liabilities – Money owed to individuals, businesses, or institutions

Net worth – The total value of a person or company, which can be calculated by subtracting liabilities from total assets

Pay Yourself First – The concept of putting aside a sum of money into savings each month before paying other bills

Record keeping – To write down information about a transaction or series of transactions

Risk management – The process of analyzing exposure to risk and determining the best way to handle such exposure

Savings – The process of setting aside money until a future date instead of spending it today. The goal of saving is to provide funds for emergencies, short-term goals, and investments Sharing – Using a portion of income to make charitable contributions

Spending – The act of paying money for something

Spending habits – The ways in which a person typically uses money Variable expenses – Expenses that increase or decrease