Cost-benefit Analysis 

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Definition: a decision-making process on comparing the costs and benefits of alternatives and choosing the option with the highest net benefit

Example: When you are trying to figure out whether something is going to turn out good or bad this will help you figure it out

Discretionary Income

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Defintion: disposable incmome less payments for essentials, including food, shelter, healthcare, and transportation.

Example:The money that you have remaing after you have paid for all the essentials (taxes, food, clothing, shelter,etc.) is the discretionary income

Disposable Income

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Defintion: total (gross) income tax payments and other fixed deduction, such as insurance payments; the same as net income

Example: The amount of money left after you have paid all your bills/taxes have been paid

Fixed expenses

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Definition: an expense that generally does not change in each time period

Example: House payment, car payment, insurance, utilities, etc.

Impulse Buying 

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Definition: unplanned or spontaneous buying not based on rational decision making that tries to create instant self gratification 

Example:When you go to the mall just to "walk" around, but end up buying a lot of things 

Need

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Definition: something necessary for survival; such as a subsistent amount of food and shelter

Example: food, house, car, necessary clothes, etc.

Net Income

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Definition: total (gross) income less tax payments; the same as disposable income

Example: The money you have left after all expenses, taxes, and interest have been deducted

Opportunity Cost

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Definition: the value of the next-best alternative that is sacrificed when making a decision

Example: It is something you give up to do something else. For example if you are debating in getting in honors class or regulars class and you choose regualrs because it's easier then the oppurtunity cost would be honors class.

"Paying Yourself First"

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Definition: the principle of saving money before any spending occurs, which typically considers savings as a fixed expense rather than a variable expense

Example: Putting money into a savings account or somewhere safe from every pay check

Saving

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Definition: the portion of disposable income not spent

Example: The money you save from every paycheck or the amount of money you don't spend from your paycheck

Spending

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Definition: paying for the consumption of needs and wants

Example: The money you spend paying your bills and the things you want

Variable Expense

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Definition: an expense that can change in each time period and over which an individual generally has significant control

Example: Gas, food, some bills, clothes,etc. 

Want

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Definition: something desired but not necessary for survival

Example: a movie, shoes, clothes, junk food, make-up, etc.