Budgeting and Investing

1. When creating a budget, which list below portrays expense categories in the most responsible order?

• 1. All of your needs, high priority wants, low priority wants, savings

• 1. All of your needs, savings, high priority wants, low priority wants

• 1. All of your needs, high priority wants, savings, low priority wants

• 1. Savings, high priority wants, low priority wants, all of your needs

2. Why is it important to create a budget?

• 1. A budget is a necessary to qualify for loans and credit cards

• 1. A budget makes filing your taxes faster and simpler

• 1. A budget will help you save money and prioritize your spending

• 1. A budget will guarantee you have enough money saved for college so you won't need loans

3. Which of the following situations is an example of net pay?

• 1. Brian multiplies his hourly wage by his total hours worked

• 1. Chrissy multiplies their hourly wage by their total hours worked and subtracts taxes

• 1. Timothy multiplies his hourly wage by his total hours worked then subtracts taxes and deductions

• 1. Helene multiplies her hourly wage by her total hours worked then subtracts taxes, deductions, and budgeted needs

1. What does it mean to "pay yourself first?"

• 1. Set aside some fun money in each month's budget so you can enjoy yourself

• 1. Auto-deposit a set amount of money into savings after each paycheck so that you don't spend all your income

• 1. Be self-employed, so that you don't have a boss and get to keep all income from your business for yourself

• 1. Do all of your budgeting at the beginning of the month, rather than at the end

2. Which of the following is a recurring expense?

• 1. Rent

• 1. A large car repair bill

• 1. A concert ticket

• 1. Daily Starbucks latte

3. Djamila is using the envelope budgeting method.  She wants to go out with friends to eat and opens her Restaurant envelope to find that it only has $5 left in it.  What budgeting advice would you give to her?

• 1. Borrow money from another category that will likely have a surplus this month

• 1. Use her credit card and put extra money into the credit card envelope next month

• 1. Dip into her emergency fund to cover the shortfall

• 1. Suggest other options to her friends that don’t involve going out to eat

Standard expense that happen every month on a certain day and for a certain amount.

• Fixed

• Recurring

• Non-recurring

• Whammy

Expenses that happen throughout the month like groceries or gasoline

• Fixed

• Recurring

• Non-recurring

• Whammy

Unpredictable expenses like having to fix your roof or unexpectedly owing money on your taxes

• Whammy

• Non-recurring

• Recurring

• Fixed

Which of the following statements are true about savings?

• It is meant for short-term goals

• It involves assets like stocks and bonds

• It harnesses compound interest and higher average returns to grow your wealth faster

• It involves very little risk