Foundations in Personal Finance: Chapter 3 Section 3 Review

Why do cash flow plans sometimes not work?

• Because they leave out important expenses

• Because they are too complicated

• Because people don't do a budget

• Because they are not realistic

What is the key to making a budget work?

• Keeping your life simple

• Having a long budget plan

• Having a large emergency fund

• Having a detailed checklist

What is the purpose of a budget?

• To remove guilt, shame, and fear associated with buying

• To prevent overdrafts and bounced checks

• To manage time effectively

• To create unity in a marriage

What is the zero-based plan?

• A plan where every dollar is assigned a purpose

• A plan where no money is spent

• A plan where all expenses are eliminated

• A plan where income exceeds expenses

What is the purpose of using the envelope system?

• To prevent overspending in specific categories

• To keep track of income and expenses

• To avoid using credit cards

• To save money for emergencies

Why is it important to budget for car repairs?

• Because cars break down and repairs are necessary

• Because car repairs are unexpected expenses

• Because car repairs are expensive

• Because car repairs can be avoided

Why should you avoid overdraft protection?

• Because it is a form of going into debt

• Because it helps manage bank accounts

• Because it is free of charge

• Because it prevents overdraft fees

What is the purpose of opening a savings account?

• To save money for future expenses

• To separate income and expenses

• To avoid overdraft fees

• To have a backup checking account

What is the key to making a budget successful?

• Sticking to the budget and not overspending

• Having a large emergency fund

• Having a high income

• Using credit cards for expenses