Final Exam

What is the purpose of a budget?

• The purpose of a budget is to complicate financial management and increase stress.

• The purpose of a budget is to restrict spending and limit financial freedom.

• The purpose of a budget is to allocate income and resources to meet financial goals and manage expenses.

• The purpose of a budget is to randomly allocate income and resources without any goals or planning.

What are some common budgeting methods?

• 50/30/20 method, envelope system, zero-based budgeting, balanced money formula

• random allocation method

• spending spree method

• 80/20 method

Why is it important to have an emergency fund?

• To provide a financial safety net for unexpected expenses or emergencies.

• To have more money for vacations and luxury items.

• To rely on credit cards for emergencies.

• To waste money on unnecessary expenses.

What is a credit score and why is it important?

• A credit score is a measure of an individual's popularity on social media.

• A credit score is a rating given to individuals based on their physical fitness.

• A credit score is a numerical representation of an individual's creditworthiness.

• A credit score is a measure of how much money an individual has in their bank account.

What a person earns after payroll taxes and other deductions are taken out; often referred to as take-home pay

• Positive Net income

• Negative Net income

• Expense

• Net Income

The cost of goods or services; money paid out

• Expense

• Financial literacy

• Net income

• Budget

The knowledge and skill base necessary for people to be informed consumers and manage their finances effectively

• Expense

• Financial Literacy

• Gross-Income

• Zero Based Budget

Money received for work, as a gift, or through investments

• Expense

• Income

• Credit Card

• Loan

The amount you earn before taxes and other payroll deductions

• Expenses

• Fixed Income

• Gross Income

• Net Income

A savings account set up specifically to be used to cover financial emergencies

• Emergency Funds

• Gross Income

• Zero-based budget

• expenses