01 Personal Finance Foundations Free Online FlashCards

What is personal finance?

Personal finance is making money choices to support present needs and future goals.

What contributes to financial well-being?

Financial well-being includes managing everyday finances, handling unexpected costs, progressing toward goals, and having meaningful choices.

What makes a financial goal useful?

A useful goal is specific, measurable, realistic, relevant to your priorities, and tied to a target date.

Why rank financial goals?

Ranking goals helps you decide what to fund first when available money cannot cover everything at once.

What are assets?

Assets are resources with financial value, such as savings, investments, or a vehicle’s resale value.

How is net worth calculated?

Net worth equals assets minus liabilities: $\text{Net worth} = \text{assets} - \text{liabilities}$.

What does a net worth figure not reveal by itself?

Net worth does not show whether enough money is immediately available to pay bills due soon.

What does a cash-flow record show?

A cash-flow record tracks money received and spent over a period, showing whether cash increased or decreased.

What distinguishes cash-flow inflows from outflows?

Inflows are money received, such as take-home pay; outflows are money spent or set aside, such as bills and purchases.

How do a financial snapshot and cash-flow record differ?

A financial snapshot shows what you own and owe at a point in time; a cash-flow record shows where money came from and went over a period.

How can bill timing create a cash shortfall?

Bills due before payday can create a shortfall even when monthly income exceeds planned monthly expenses.

Jordan receives $\$3{,}000$ and plans $\$2{,}650$ in monthly expenses and saving. What is the difference?

Jordan’s monthly difference is $\$3{,}000 - \$2{,}650 = \$350$, but bills due before payday could still cause an early-month shortfall.