| A | B |
|---|
| financial plan | a set of goals for spending, saving, and investing money you receive |
| disposable income | money you have to spend as you wish--after all taxes have been paid |
| budget | spending and savings plan based on your expected income and expenses |
| fixed expenses | expenses that remain constant and cannot be easily changed or removed from a budget |
| variable/flexible expenses | expenses that may change according to needs and short-term goals |
| assets | items of value that a person owns |
| liabilities | amounts of money owed to others, also known as debts |
| net worth | the difference between what is owned and what is owed |
| contract | a legally enforceable agreement between two or more parties to do or not to do something |
| implied contract | unwritten agreements which are legally enforceable |
| consideration | anything of value exchanged as part of a contract |
| competent parties | persons who are legally able to give sane and intelligent consent and are legally capable of entering into contracts |
| What are the steps in preparing a budget? | (1) Estimate your total income, (2) decide your savings, (3) Estimate your expenses, (4) Balance your budget |
| If you had to reduce your speading to balance your budget--would you reduce fixed or variahble expenses first? | variable |
| What types of records should you keep? | income and expense records, net worth statement, personal property inventory, tax records |
| In order to be legally enforceable, contracts must contain what four elements? | agreement, consideration, contractual capacity, legality |
| What are five consumer responsibilities when entering into a contract? | fill in all blank spaces, write terms clearly, be sure all information is included, understand and read contact before signing, check for changes, keep a copy |
| What are five benefits of financial planning | (1) Determine/evaluate options for your money (2) Prioritize options to maximize your money (3) Avoid careless spending (4) Organize income sources to achieve your financial goals (5) Avoid money stress--you've got a plan |
| Total fixed expenses should not be more than | 50%-60% of take-home pay |
| personal property inventory | a list of all the values you own, the purchase price and approximate current values |
| solvent | a favorable financial positions--your assets are greater than your liabilities |
| insolvent | a poor financial position – your liabilities are greater than your assets (you owe more than you own |
| Keep tax records for | 3 years |
| A contract for sale of property must be | written |
| Elements of a legally binding contract | agreement, consideration, capacity, legality |
| contractual capacity | legal ability of the parties to enter a contract (competent parties) |
| Signing a contract means | you have read and understand the terms of a contract |
