A Guide to Financial Terms
FE-222a, Reviewed and Reprinted June
2004
Click here for an Adobe Acrobat
PDF file suitable for printing. (29KB)
Assets
Current dollar value of the items you own.
Monetary Assets
Cash or items that can be readily converted to cash; used for living expenses,
savings and emergencies.
Tangible Assets
Physical items primarily used to maintain lifestyle, but could be sold to raise
cash. Such things as your car, furniture or equipment. Many people are surprised
to find out how little their assets are worth when they try to sell them.
Investment Assets
Tangible or intangible items obtained for producing additional income or held
for speculated increase in value.
Balance Sheet
A financial "snapshot;" an overview of individual/ family financial
condition at a given time. Also known as a statement of financial position or
position statement, it summarizes the assets and liabilities of a business entity
at a certain time.
Budget or Spending Plan
Amounts expected to be received or spent within a specific time. Revising such
estimates is necessary periodically. When budgeted expenses exceed budgeted
income, three alternatives are recommended: earn more income, cut back expenses,
or a combination of the two.
Cash Flow Calendar
Annual estimated income and expenses for each budget time period are recorded
on this sheet to help determine surplus or deficit situations. Effective management
of cash flow can include reducing expenses during months with financial deficits,
increasing income, using planned savings, using emergency savings, or borrowing.
Comparison Shopping
Using an informed process of comparing products or services to find those that
best fit your budget, needs and specifications.
Consumer Price Index
Published monthly by the U.S. Bureau of Labor Statistics, this index provides
a broad measure of the cost of living for consumers. The index represents a
statistical average of prices expressed as a percentage of a base period. Basically,
it shows whether prices for a particular item, such as food or clothing, have
risen or fallen since the last comparison period. A number of specific price
indexes are compiled privately.
Expenses
Fixed Expenses
Expenditures usually of the same amount for each budgeted time period,
such as rent, car payments, loan installments, regular savings.
Variable Expenses
Expenditures that can fluctuate due to individual control, such as food, utilities,
furnishings. Some expenses can be listed as both fixed and variable. Variable
expenses are the easiest ones to juggle in times of financial difficulty.
Financial Planning
A coordinated series of plans, beginning with goals and objectives that reflect
your values, attitudes, lifestyle circumstances, wants and needs. This process
helps you to develop and implement financial moves to reach financial objectives.
Financial Skills
The techniques of decision making in personal financial management such as budget
preparation, record keeping, savings and investment plan and use of credit.
Financial Statement
A summary of individual or family finances, on an annual or other basis.
Financial Tools
Instruments used in making personal financial management decisions, such as
budgets and net worth statements.
Goal
The long-term objective that you plan to attain through financial planning and
management efforts.
Gross Income
All income from all sources, before taxes and other withholdings.
Liabilities
The dollar value of items for which you owe; total debts.
Life Cycle Used for description of family or individual status along
a continuous sequence of family or individual family development stages. For
example, stages in individual development include periods such as adolescence
and middle adulthood; stages in family development include periods such as starting
out and the empty nest period.
Needs vs. Wants
Needs are those items necessary for survival,
such as food, clothing, shelter, medical services.
Wants are those items beyond the necessary
that are desired for improved comfort and satisfaction. These vary according
to individual interests, tastes and lifestyles.
Net Income
Income after taxes, the total amount available for individual or family expenses.
Net Worth Statement
A statement showing the difference between total assets and total liabilities
for an individual or a family.
Personal Spending Style
How you spend money, influenced by your values, emotions, attitudes, and other
factors resulting from life experiences. Conflict of spending styles may result
in disagreement over family finances.
Preshopping Research
Gathering information on products before a final selection is made.
Real Income
Income that is measured in constant prices relative to some base time period.
Spending Plan
A plan for spending and saving family resources to meet identified goals, a
budget.
Other related worksheets:
Family Living Spending
Forecast (33KB PDF file)
Family Balance Sheet (27KB
PDF file)
FE-222 -
Family Money Manager
For more information on this and other topics, see: www.
ag.ndsu.nodak.edu
FE-222a, Reviewed and Reprinted June
2004
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