Budgeting Glossary

Assets– An asset is anything that is owned by an individual. With respect to saving and investing, assets are generally categorized as liquid (cash) assets and capital (investment) assets
Balanced Budget– A situation where income and expenses are equal
Budget surplus– A situation where money is left over after all obligations have been paid
Budget deficit– A situation where there is not enough money to cover expenses
Budget– An organized plan for saving and spending based on your expected income and expenses
Cash flow– Typically used to measure the health of a business, it calculates income minus expenses
Comparison shop– Checking several alternatives to find the best product at the best price
Disposable income– The money you have to spend or save as you wish after taxes, social security, and other required and optional deductions have been withheld from your gross pay
Emergency Fund– An amount of money set aside to cover bills in case of emergency
Expenses– The things people pay for with their money
Financial Plan– A plan of action that allows a person to meet not only the immediate needs but also the long-term goals
Fixed expenses– Expenses that remain constant
Impulse spending– Making purchases without comparing costs or benefits beforehand
Income– Money earned in exchange for work, or received from investments, allowance, or gifts
Investing– The process of setting money aside to increase wealth over time and accumulate funds for long-term financial goals such as retirement
Liabilities– Money owed to individuals, businesses, or institutions
Net worth– The total value of a person or company, which can be calculated by subtracting liabilities from total assets
Pay Yourself First– The concept of putting aside a sum of money into savings each month before paying other bills
Record keeping– To write down information about a transaction or series of transactions
Risk management– The process of analyzing exposure to risk and determining the best way to handle such exposure
Savings– The process of setting aside money until a future date instead of spending it today. The goal of saving is to provide funds for emergencies, short-term goals, and investments
Sharing– Using a portion of income to make charitable contributions
Spending– The act of paying money for something
Spending habits– The ways in which a person typically uses money
Variable expenses– Expenses that increase or decrease