Financial Literacy Quiz

What is the main reason to create a budget?

• To spend more money than you have

• To borrow money from someone

• To track how much you spend and save money

• To spend all your money on things you want

Answer explanation

The main reason to create a budget is to track how much you spend and save money.

What is the difference between a need and a want?

• A need is something you would like but can live without, a want is something you must have to survive

• A need is something you would like but can live without, a want is something you would like but can live without

• A need is something you must have to survive, a want is something you would like but can live without

• A need is something you must have to survive, a want is something you must have to survive

Answer explanation

A need is essential for survival, while a want is something desirable but not necessary for survival.

What is the purpose of an emergency fund?

• To borrow money from someone

• To spend all your money on things you want

• To track how much you spend and save money

• To have money set aside for financial surprises

Answer explanation

The purpose of an emergency fund is to have money set aside for financial surprises.

What is the difference between a savings account and a checking account?

• A savings account allows you to write checks, a checking account pays interest

• A savings account is for long-term money storage, a checking account is for day-to-day use

• A savings account pays interest, a checking account allows you to write checks

• A savings account is for day-to-day use, a checking account is for long-term money storage

Answer explanation

A savings account is for long-term money storage, a checking account is for day-to-day use

What is the definition of interest?

• Monetary fee paid for borrowing money

• Spending more than you earn

• Account you can write checks from

• Money set aside for future use

Answer explanation

Interest is a monetary fee paid for borrowing money.

What is the purpose of a credit card?

• To loan money and build credit

• To have money set aside for financial surprises

• To borrow money from someone

• To spend all your money on things you want

Answer explanation

The purpose of a credit card is to loan money and build credit.

What does it mean to spend within your means?

• To spend more money than you have

• To spend all your money on things you want

• To not spend more money than you have

• To borrow money from someone

Answer explanation

Spending within your means means not spending more money than you have. It is important to live within your financial limits and avoid debt.

What is the definition of a lender?

• Spending more than you earn

• Account you can write checks from

• Money set aside for future use

• Person or bank loaning money

Answer explanation

A lender is a person or bank that loans money.

What is the purpose of a checking account?

• To write checks and access money for day-to-day use

• To have money set aside for financial surprises

• To track how much you spend and save money

• To spend all your money on things you want

Answer explanation

A checking account is used to write checks and access money for day-to-day use.

What is the definition of debt?

• Spending more money than you have

• Monetary fee paid for borrowing money

• Spending more than you earn

• Money set aside for future use

Answer explanation

Debt is the act of spending more money than you have, which results in owing money to someone else. It is not about spending more than you earn or setting money aside for future use. The correct choice is 'Spending more money than you have'.