Understanding Income Types

Front

What is an example of earned income?

Back

Getting an allowance for doing chores

Answer explanation

Earned income is money received for work performed. 'Getting an allowance for doing chores' is an example of earned income, as it involves completing tasks for payment, unlike the other options which are not earned.

Front

Which of the following is an example of passive income? Babysitting for a neighbor, Mowing lawns on weekends, Earning interest from a savings account, Washing cars for money

Back

Earning interest from a savings account

Answer explanation

Earning interest from a savings account is passive income because it generates money without active work. In contrast, babysitting, mowing lawns, and washing cars require ongoing effort.

Front

Why is it important to earn money?

Back

To buy things you need and want

Answer explanation

Earning money is essential to buy things you need and want, ensuring you can meet your basic needs and enjoy some comforts. The other options do not reflect the practical importance of earning money.

Front

Samuel is a high school student looking to earn some extra money. What is a common way for him to achieve this?

Back

Getting a part-time job or doing chores

Answer explanation

A common way for teens to earn money is by getting a part-time job or doing chores. This allows them to gain work experience and earn income, unlike options like investing or loans, which are less accessible for them.

Front

Evelyn works at a company and receives a regular paycheck. Which of the following best describes her salary?

Back

A fixed amount of money earned for work

Answer explanation

A salary is defined as a fixed amount of money earned for work, typically paid on a regular basis. This distinguishes it from gifts, tips, or payments for single tasks.

Front

Aria is planning her monthly expenses. What is the purpose of her budget?

Back

To help plan and control spending

Answer explanation

The purpose of a budget is to help plan and control spending, ensuring that resources are allocated effectively. This choice emphasizes financial management, unlike the other options which suggest poor financial practices.

Front

James is planning his monthly finances. What should be included in his budget?

Back

His income, savings, and expenses

Answer explanation

A comprehensive budget should include your income, savings, and expenses to provide a complete financial picture. This helps in planning and managing your finances effectively.

Front

Ava earns $50 from her part-time job and wants to save 20% of her earnings. How much should she save?

Back

$10

Answer explanation

To save 20% of $50, calculate 0.20 x 50 = $10. Therefore, you should save $10.

Front

Ava is planning her monthly budget. Which of the following is NOT part of her budget? Needs, Wants, Impulse spending, Savings

Back

Impulse spending

Answer explanation

Impulse spending is not part of a budget, as it refers to unplanned expenses that can disrupt financial planning. In contrast, needs, wants, and savings are essential components of a budget.

Front

Ethan is a college student who spends more money than he makes from his part-time job. What happens to Ethan?

Back

Ethan goes into debt

Answer explanation

If you spend more money than you make, you will go into debt as you are using borrowed funds to cover your expenses. This leads to financial obligations that must be repaid.