Gartman - Budgeting

Front

How do wages and salary differ?

Back

Salary describes what you earn on an annual basis.

Answer explanation

Salary refers to a fixed annual amount earned, typically paid monthly or biweekly, while wages are often hourly and can vary based on hours worked. Thus, the correct choice is that salary describes what you earn on an annual basis.

Front

Which of the following are TRUE about gross income and net income? They are the same thing, Gross income is the total amount earned AFTER deductions, Gross income is the total amount earned BEFORE deductions, Net income is the total amount earned BEFORE deductions

Back

Gross income is the total amount earned BEFORE deductions

Answer explanation

Gross income refers to the total earnings before any deductions, such as taxes or expenses. Therefore, the statement 'Gross income is the total amount earned BEFORE deductions' is true, while the other options are incorrect.

Front

Which of the following may NOT always appear on your paycheck stub? Gross Pay, Net Pay, Your Role/Title, Local Tax

Back

Your Role/Title

Answer explanation

Your Role/Title may not always appear on your paycheck stub, as it is not a mandatory item. In contrast, Gross Pay, Net Pay, and Local Tax are typically required components of a paycheck stub.

Front

It's common to have all of the following expenses BEFORE signing a lease EXCEPT... Renter's Insurance, Application fee, Application deposit, Apartment hunting expenses

Back

Renter's Insurance

Answer explanation

Renter's Insurance is typically required after signing a lease, while the other expenses like application fees, deposits, and apartment hunting costs are incurred before signing.

Front

Which of the following might you pay WHEN you sign your lease? Finder's fee, Application fee, Security deposit, Renter's insurance

Back

Security deposit

Answer explanation

When you sign your lease, you typically pay a security deposit, which is held by the landlord to cover potential damages or unpaid rent. The finder's fee, application fee, and renter's insurance are usually paid at different times.

Front

According to a rule of thumb, rent shouldn't take up more than ___ % of your take-home pay.

Back

25-30%

Answer explanation

According to financial guidelines, rent should ideally not exceed 25-30% of your take-home pay. This range helps ensure that you have enough income left for other expenses and savings.

Front

Which of the following would typically NOT be covered under renter's insurance? A friend slips and twists his ankle in your living room, Your apartment is broken into and your laptop is stolen, A fire destroys 80% of your belongings, Your apartment is flooded, destroying your furniture

Back

Your apartment is flooded, destroying your furniture

Answer explanation

Renter's insurance typically covers personal property loss from theft, fire, or similar events. However, flooding damage is often excluded or requires separate flood insurance, making it the correct choice for what is NOT covered.

Front

Which of the following is a step you can take to mitigate the risk of buying a used car?
Options:
Get a vehicle history report,
Have a mechanic inspect the car after you buy it,
Skip the test drive; you have time after you buy it to drive,
Buy a more expensive vehicle to ensure quality

Back

Get a vehicle history report

Answer explanation

Getting a vehicle history report is crucial as it provides information on past accidents, title issues, and service history, helping you make an informed decision before purchasing a used car.

Front

Which of the following is NOT a cost of owning a car? License and Registration fees, Gasoline, Utilities, Insurance

Back

Utilities

Answer explanation

Utilities are not a direct cost of owning a car, while license and registration fees, gasoline, and insurance are all necessary expenses associated with car ownership.

Front

Which of the following reasons would explain why Justin has decided not to own a car?
Options:
He doesn't have access to public transportation
The walking score in his city is high
Driving would reduce the time it takes to get to work by 30 minutes
There are numerous car dealerships in his area

Back

The walking score in his city is high

Answer explanation

Justin likely chose not to own a car because the high walking score in his city indicates that he can easily walk to most places, making car ownership less necessary.