Podcast
Questions and Answers
What are the consequences of overdrawing your checking account?
What are the consequences of overdrawing your checking account?
Bounced check fee from the store, the overdraft fee from your bank and stress from mismanagement.
Doing a budget does not make overspending more likely.
Doing a budget does not make overspending more likely.
True (A)
Your monthly budget should include...
Your monthly budget should include...
Variable expenses, fixed expenses and discretionary expenses.
A budget is meant to summarize the saving and spending that has taken place over the past year.
A budget is meant to summarize the saving and spending that has taken place over the past year.
A millionaire spends less money than he or she makes.
A millionaire spends less money than he or she makes.
Rent is...
Rent is...
Eating out is...
Eating out is...
Car repairs are...
Car repairs are...
Groceries are...
Groceries are...
What does a written budget remove from your finances?
What does a written budget remove from your finances?
What are the guidelines for budgeting with an irregular income?
What are the guidelines for budgeting with an irregular income?
The percentage of Americans living paycheck to paycheck is...
The percentage of Americans living paycheck to paycheck is...
Why is the zero-based budget the best method of budgeting?
Why is the zero-based budget the best method of budgeting?
Will your bank reconcile your bank account for you?
Will your bank reconcile your bank account for you?
Where will you find the most current balances for your accounts?
Where will you find the most current balances for your accounts?
The number-one cause of divorce in North America today is stress and disagreements over money.
The number-one cause of divorce in North America today is stress and disagreements over money.
The envelope system works great for managing spending on things that don't normally have a fixed monthly expense.
The envelope system works great for managing spending on things that don't normally have a fixed monthly expense.
If you write a zero-based budget every month, it is not necessary to reconcile your account.
If you write a zero-based budget every month, it is not necessary to reconcile your account.
Budgeting is crucial to your financial success.
Budgeting is crucial to your financial success.
Writing and following a zero-based budget will help you avoid overspending and impulse purchases.
Writing and following a zero-based budget will help you avoid overspending and impulse purchases.
A debit card cannot be used for online purchases.
A debit card cannot be used for online purchases.
Paying yourself first means you should assign a portion of your income to saving and investing every month.
Paying yourself first means you should assign a portion of your income to saving and investing every month.
Online bill pay allows you to make payments to whomever you wish without having to write a check and send it in the mail.
Online bill pay allows you to make payments to whomever you wish without having to write a check and send it in the mail.
Having more than one bank account is never a good idea since it can complicate money management.
Having more than one bank account is never a good idea since it can complicate money management.
Setting up automatic account transfers is the easiest way to build your savings for your emergency fund or large purchases.
Setting up automatic account transfers is the easiest way to build your savings for your emergency fund or large purchases.
What is overdraft?
What is overdraft?
What is a zero-based budget?
What is a zero-based budget?
What is the envelope system?
What is the envelope system?
What is an impulse purchase?
What is an impulse purchase?
What does it mean to reconcile a bank account?
What does it mean to reconcile a bank account?
What is a budget?
What is a budget?
What are fixed expenses?
What are fixed expenses?
What are discretionary expenses?
What are discretionary expenses?
What is a cash flow statement?
What is a cash flow statement?
What is a check register?
What is a check register?
What are the reasons cash flow plans sometimes do not work?
What are the reasons cash flow plans sometimes do not work?
Why is it important to always have a cash flow plan?
Why is it important to always have a cash flow plan?
What are the various payment options that come with a checking account?
What are the various payment options that come with a checking account?
Why is it important to maintain a file of both paper and electronic financial records?
Why is it important to maintain a file of both paper and electronic financial records?
Why is it important to develop a personalized financial plan for spending, saving, and record keeping?
Why is it important to develop a personalized financial plan for spending, saving, and record keeping?
What are some changes in circumstances that might affect a personal budget?
What are some changes in circumstances that might affect a personal budget?
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Study Notes
Consequences of Overdrafting
- Result includes bounced check fees, bank overdraft fees, and stress from financial mismanagement.
Budgeting Misunderstandings
- Creating a budget does not encourage overspending; it helps manage finances effectively.
- A budget is a financial plan for future spending, not a summary of past financial activities.
Essential Components of a Budget
- Must incorporate variable expenses, fixed expenses, and discretionary expenses.
- A zero-based budget assigns a specific purpose for every dollar earned, promoting financial accountability.
Types of Expenses
- Fixed expenses (e.g., rent) remain constant each month.
- Variable expenses (e.g., groceries) fluctuate in amount.
- Discretionary expenses (e.g., dining out) are non-essential but may add enjoyment.
- Intermittent expenses (e.g., car repairs) occur at irregular intervals.
Budgeting Best Practices
- Following a written budget helps eliminate overspending, crisis management, and associated guilt.
- Guidelines for irregular incomes include prioritizing expenses and adhering to a planned list when spending occurs.
Financial Statistics
- Approximately 70% of Americans live paycheck to paycheck.
Importance of Reconciliation
- Regularly reconciling your bank account with your check register is essential for accuracy.
Financial Planning Fundamentals
- "Pay yourself first" emphasizes saving and investing a portion of income regularly.
- Utilizing automatic transfers simplifies saving for emergencies and large purchases.
- Maintaining both paper and electronic financial records is vital for accurate tracking and error correction.
Budgeting Techniques
- The envelope system helps manage spending by categorizing cash for specific expenses.
- Impulse purchases are unplanned and often lead to financial strain.
Personal Finance and Relationships
- Financial stress is a leading cause of divorce in North America, indicating the importance of financial harmony in relationships.
Personal Financial Development
- Everyone's financial situation is unique; create a personalized financial plan that addresses individual strengths and weaknesses.
- Changes in income or family circumstances may necessitate adjustments in personal budgeting.
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