Aaron realizes he has a budget deficit of roughly $175 at the end of two months in a row. Which of these options makes the most sense for him to fix his problem?

• Cancel his cable TV subscription and go out to dinner three fewer times each month with friends.

• Contribute $100 less to savings each month and $75 less to his retirement fund.

• Start paying just the minimum monthly payment on his student loan and credit card debt, instead of the extra he's been contributing.

• Sell his current car and get a less expensive vehicle.

Needs can be defined as basic shelter, basic clothing, and basic food. All the things outside those categories are wants.

• True

• False

Samantha has difficulty understanding the difference between wants and needs - as everything is a need! All of the following EXCEPT which question will be helpful to ask herself if it's a need or not?

• How much do I want this item right now?

• How am I going to pay for this purchase? If I have to charge it or take out a loan, will I be able to afford the monthly payment?

• Is there a less expensive version or can I buy it used?

• How many hours of work would it take me to pay for this item?

In your personal budget, what does discretionary spending refer to?

• The money that you spend on impulse while at the shops.

• Money that is specifically put aside to pay for essential items such as rent, tax, basic food requirements, basic clothing requirements.

• Money left over (or budgeted) once all essential items have been taken care of.

• There is no place for discretionary spending in a personal budget.

Which of the following is a want, not a need?

• Grooming and hygiene products

• A replacement jacket for the one that you have worn for 10 years and is in need of repair

• Unlimited data plan for your smartphone

Which of the following is a sign that you are making a purchasing decision based on a need and not emotion?

• My friends and family would be disappointed if I did not get this.

• I have to pay the minimum monthly balance for my credit card and student loans.

• I can't stand having an outdated model, even if it works.

• I deserve a reward for my hard work.

The MINIMUM amount you have to pay on loans and credit cards is a need, not a want.

• True

• False

For the average American, in what category do they spend the highest percentage of their income?

• Housing

• Food

• Transportation

• Travel

True or False? The 50/30/20 Rule is the preferred and recommended way that you should think about your monthly budget.

• True

• False

Which of the following are the correct allocations of money to the 50/30/20 Rule?

• 50% Wants, 30% Needs, 20% Savings

• 50% Needs, 30% Wants, 20% Savings

• 50% Savings, 30% Needs, 20% Needs