Chapter 3 Budgets and Banking
Objectives
Section 1: Budgeting 101
* Understand the purpose of cash flow planning
* Identify reasons some people avoid having or sticking to a budget
* Identify changes in personal spending behavior that contribute to wealth building
* Explain the difference between a cash flow statement and a budget
Section 2: The Basics of Banking
* Develop a filing system for keeping financial records, both paper and electronic
* Describe recordkeeping features that financial institutions provide for online account management
* Describe how to use different payment methods and banking features
Section 3: The Importance of Having a Zero-Based Budget
* Define zero-based budget
* Develop a plan for spending and saving that has both long-term and short-term components
* Analyze how changes in circumstances can affect a personal budget
Vocabulary
Budget/Spending Plan - a written cash flow plan
Cash Flow Statement - a summary that shows total income and spending for a given time period
Carbon Check - a copy of each check you write
Envelope System - series of envelopes that are divided into categories (food, entertainment, gas, etc. ) and are used to store cash for planned monthly expenses
Impulse Purchase - an item that is bought without previous planning or consideration of the long-term effects
Overdraft - Occurs when money is withdrawn from a bank account and the available balance goes below zero
Reconcile - To match your bank statement with your checkbook
Zero-Based Budget - a cash flow plan that assigns an expense to every dollar of your income, wherein the total income minus the total expenses equals zero