Managing Money and Making Responsible Decisions

Opportunity cost

• is what you give up when you make a decision to buy an item.

• is the amount of money a person has to spend after needs are met.

• describes how you will pay for achieving your personal goals.

• is money deposited for a fixed amount of time at a fixed interest rate.

Fixed Expenses

• are expenses that do not change each month.

• are expenses that can go up and down each month.

• are differences between planned and actual income or expenses.

• describe how you will pay for achieving your personal goals.

Assets

• are items of value that you own which may be appreciating or depreciating in value.

• allows you quick and easy access to your money without penalties.

• is interest earned on both principal and previous interest earnings.

• are things we desire to buy.

Wants

• are expenses that can go up and down each month.

• describe how you will pay for achieving your personal goals.

• are things you want to achieve.

• are things we desire to buy and go beyond filling survival needs and basic comforts.

Which of the following is an example of income?

• Your paycheck

• Interest on a savings account

• Birthday money

• These are all examples on income

It's important to save for the following reasons:

• To meet long term and short term goals

• To build wealth

• To protect against unexpected crisis (emergency, loss of job)

• All of the above

Reasons for making a budget include

• To have a spending plan

• To have a savings plan

• To keep track of debits and credits

• All of the above

What does Pay Yourself First Mean?

• Buy self something nice when you get paid

• Be responsible with your money by paying your bills first.

• Budget some money into savings every month.

• All of the above

The essentials you can't live without are called:

• Needs

• Wants

• Income

• Expenses

Tony borrowed money from the bank to buy a new house. A year later he lost his job and has started to not be able to make his house payments. This problem is known as what? 

• credit 
• budget 
• debt 
• interest