Chapter 6 Review

If you are trying to substantially reduce the amount you spend on food, you should try...

• Cooking your own food at home for as many meals as possible

• Dining at restaurants more often so you don't waste water doing dishes

• Eating way more snacks on the go and way fewer meals at home

• Drinking more coffee and soda so you are not as hungry for food

You are putting together your first post-graduation budget. Your take-home pay will be $2,500 per month. You estimate your monthly costs to be rent of $800, car payment of $350, car insurance of $150, car maintenance of $50, entertainment of $500, food expense of $250, mobile phone of $75, student loan payment of $225 and other expense of $300. How would you describe your budget after analyzing all of your income and expenses?

• You have a surplus of $200

• You have a deficit of $200

• You have a deficit of $2,700

• You have a surplus of $5,200

You are interested in renting an apartment for your senior year in college. You meet with the landlord, complete the application, and after checking your credit background and references, the landlord approves your application. In most cases, you will need to provide the landlord with _________ at the time you sign the lease in order to get the apartment.

• Rent payment for the first three months

• First month's rent and a security deposit

• An additional list of references and copies of your last three tax filings

• A $500 bonus payment for awarding you the apartment

For most Americans, which budget expense category is largest?

• Housing

• Food

• Transportation

• Clothes

You're considering moving into a 4-bedroom apartment with 3 roommates rather than living on your own post-college. Which of your expenses would likely DECREASE by having roommates?

• Renters insurance

• Cell phone bill

• Internet bill

• Student loan payment

Which description is most accurate for a Zero-Based Budget?

• You put every dollar of your take-home pay into a budget category each month

• You spend your checking account balance down to $0 every month

• You spend your saving account balance down to $0 every month

• You pay every one of your debts down to $0 every month

How is gross pay different than net pay?

• Gross pay is for hourly workers, while net pay is for salaried employees

• Gross pay is always lower, while net pay is always higher

• Gross pay is the total you earned, while net pay has taxes deducted

• Gross pay is used for spending, while net pay is used for budgeting

Which one of these expenses most likely represents a VARIABLE cost in someone's budget?

• Electricity bill

• Rent

• Car insurance premium

• Student loan payment

What action corresponds to the advice "Pay yourself first?"

• Wait until the end of the month to determine how much you have leftover to save

• Set aside a fraction of your paycheck into a savings account before you start spending

• Spend your regular paycheck on needs and wants but funnel any extra money into saving

• Become self-employed so you're paying yourself instead of being paid by an employer

Some people experience great success when using budgeting apps to help them meet their goals. Why might this be the case?

• The app store guarantees you'll save money -- if you don't, they'll refund your money

• Because users carry their phones almost everywhere, budgeting becomes fast and convenient

• Apps are better at doing complex budget calculations than spreadsheets

• Most budgeting apps deposit extra funds into your account on a quarterly basis