Chapter Three: Money Management Strategy: Financial Statements and Budgeting

Cash and otheritems with a monetary value

A financial statement that reports what an individual or a family owns and owes; also called a net worth statement

A specific plan for spending income

The difference between the amount budgeted and the actual amount received or spent

The actual inflow and outflow of cash during a given time period

A financial statement that summarizes cash receipts and payments for a time period

Debts that must be paid within a short time, usually less than a year

The amount by which actual spending exceeds planned spending

Money left over after paying for housing, food, and other necessities

Inflows of cash to an individul or a household

The inability to pay debts when they are due because liabilities far exceed the value of assets

Amounts owed to others

Cash and items of value that can easily be converted to cash

Debts that are not required to be paid in full until more than a year rfom now

Day - to - day financial activities necessary to manage personal economic resources while working toward long-term financial security

The difference between total assets and total liabilities

A private storage area at a financial institution with maximum security for valuables

The amount by which actual spending is less than planned spending

Earnings after deductions for taxes and other items; also called net pay

Net Worth = Total assets - Total liabilities

Cash Surplus (or Deficit) = Total inflows - Total outflows

Debt ratio = Liabilities/Assets

Current Ratio = Liquid assets/Current liabilities

Liquidity Ratio = Liquid assets/Monthly expenses

Debt-to-Payments Ratio = Monthly credit payments/Take-home pay

Savings Ratio = Amount saved per month/Gross monthy income