A plan for future spending and saving.

Four steps in the budgeting process:

Forecasting 

implementing your budget 

monitoring your budget 

Reevaluating and revising budget    

Fixed v variable expense    

fixed doesn’t change often like rent while variable is shit that’s hard to predict (food and clothes)

What budget category is the most difficult to forecast? 

Forecasting future income and expenditures? Variable expenses?

Approaches to forecasting variable expenses one approach to forecast variable expenses is to?

One approach is to take current variable expenses and increase them by the expected rate of inflation in your area

What are good reasons for tracking budget variances?

·       To identify small cash leakages as soon as possible so that you can change your behavior before you have a major budget shortfall.

·       To ensure that large irregular cash expenses do not cause financial hardship. Income often comes in regular, predictable amounts, whereas some expenses, such as unexpected car and home repairs, tuition bills, or tax payments, may come in chunks and must be budgeted for in advance.

What you need to do first if you’re projected net cash flow is negative?

you’ll need to come up with a plan for increasing your income or reducing your expenditures to reconcile your budget. Reconciling a budget is the process of adjusting income and spending so that your expenses do not exceed your income.

The process of adjusting income expenses saving to make sure more is not spent than earned is? 

Reconciling a budget 

In a committed relationship if one partner hides purchases from another partner it is called what? 

Financial infidelity

What assets are the most liquid?    

Cash then checking account then savings account 

If you are given a household expense number, you need to know how much cash reserve you should have. 

T or f the principle of paying yourself first means you should put money aside to meet personal goals before you spend money on nonessential during the month    

Automatic bill payments helps with what; 

makes sure you pay your bills on time, you have better credit and reduce costs

A depository institution is 

A non-depository institution 

Difference between a dispository institution and a nondipository institution

D: a place that gets its funds from customer deposits

Nd: Nondepository institutions include mutual fund companies, life insurance companies, brokerage firms, and other financial services firms

Know why credit unions are a unique kind of depository institution:

Credit union is  A nonprofit depository institution owned by its depositors. Gets money from people depositing in it and they are the people who own it ran on volunteer basis non profit and

A blank is an investment company that sells shares to investors who take the money and invests it and makes money 

Know the four Ps to consider when deciding on a financial institution

products, price, people, and place.

Know the difference between time deposits and demand deposits

demand deposit savings account allows you to withdraw your money at any time. In contrast, a time deposit account requires that you keep the money in the account for a minimum period of time and may require a waiting period before you can withdraw funds.

Know which types of accounts are insured by the federal deposit I.c.(fdic) and which are

Regular savings, certificates of deposits, money market accounts (only is offered by depository institution), Regular checking, interest earning checking

Not- money market mutual funds, money market accounts not offered by depository intstitution

Rule of 72- 

A method of calculating the time required for a sum of money to double by dividing 72 by the rate of interest earned on the money.

Know what happens when you write a check you can’t cash

If you deposit a check from someone else and it is rejected for insufficient funds, your own institution will often charge you a fee, even though you were not at fault. This fee is comparable to the fee charged to the person who wrote the bad check ($20 to $30).

Know what it is called when you write a check to someone doing work for you and they don’t complete the work 

stop payment order 

 what would it be called if you got an email that is trying to get into your banking information- 

phising

What type of loan is a car loan-    

close ended credit secured 

Retail card    

credit card from a certain store offers good cash back options when shopping there

Know what the function of the cfbv is- 

they’re a government agency that makes sure banks don’t fuck you on loans

Know the relationship of the use of credit and insurance premiums

Thus, if you have a lot of outstanding debt or a history of making late credit card payments, you may be paying a higher insurance premium than others with better credit.

Risk of using credit cards    

overspending, more expensive, higher insurance premiums, limit financial flexibility

T or f if u don’t make payments on a loan the person who gave the loan can take whatever colater put up and sell it to cover the loan 

T or f if u don’t make payments on a loan the person who gave the loan can take whatever colater put up and sell it to cover the loan 

Five Cs of credit

Capacity capitol collateral character conditions 

know what you should do when you can’t meet your debt obligations

Know the recommended solutions when having trouble making payments on consumer credit

Set up a debt repayment plan, obtain a debt consolidation, second job, develop a zero based budget, live with parents, sell assets,

Know which part of the fico scoring caries the greatest weight (pie chart, biggest chunk) 

Know what an interest rate on credit cards that is below the market rate and is offered to new customers is known as what    

teaser or below market promotional

What happens when you make minimum payments on a credit card- takes forever to pay off the card-    

When looking at a car loan know if it is more likely to be fixed or variable 

Know whether or not secured loans carry lower rates of interest when compared to unsecured loans,    

Secured do carry lower rates of interest when compared to unsecured loans

Know whether or not below market interest rates on car loans are likely to be offset by higher intial fees    

Know what the maximum term is for federal students loans is ___ years 

What type of student loan doesn’t accrue interest until after graduation    

Know when interest starts to accrue on a unsubsidized stafford loan (2 questions    

What is the document that a lender records when real property is used to secure a loan 

Know the requirements to be eligible for a federal student loan

1.     Be a U.S. citizen with a valid Social Security number and a high school diploma or the equivalent.

2.     Be taking courses to fulfill requirements for a degree or certificate.

3.     Meet satisfactory progress standards set by your school.

4.     Certify that you will use the funds only for educational purposes.

5.     Certify that you are not in default on any other federal student loan.

6.     Comply with Selective Service registration, if you’re a male aged 18 through 25.

Know when repayment begins on a plus student loan    

2 months after graduation

Know the situations you can defer a student loan payment

Loan payments can be deferred for up to 3 years for economic hardship, postsecondary study (at least half-time), unemployment, or service in the military or the Peace Corps