Mastering Money: Credit, Debt, and Budgeting Basics

What is a credit score?

• The amount of money you have in your bank account

• A number that represents your creditworthiness

• The interest rate on your credit card

• The limit of credit available to you

Which of the following is a good debt repayment strategy?

• Paying only the minimum amount due each month

• Ignoring your debts until you are in a better financial situation

• Paying off the debt with the highest interest rate first

• Taking out another loan to pay off your debt

What is a budget?

• A plan for making and spending money

• A record of past spending

• A loan from a bank

• Money set aside for emergencies

Which of the following is considered unsecured debt?

• Mortgage

• Car loan

• Credit card debt

• Home equity loan

What is the first step in creating a personal budget?

• Setting financial goals

• Tracking your expenses

• Adjusting your spending habits

• Calculating your net income

What does it mean to "balance your budget"?

• Spending more than you earn

• Earning more than you spend

• Making sure your income and expenses are equal

• Saving all of your income

Which budgeting technique involves dividing your money into percentages for different spending categories?

• Zero-based budgeting

• The envelope system

• The 50/30/20 rule

• Pay-yourself-first

What is the main purpose of using a credit card responsibly?

• To spend money you don't have

• To earn rewards and build a good credit history

• To pay for emergencies only

• To avoid using cash

Which of the following is NOT a recommended method for budgeting?

• Tracking your spending in a notebook

• Using budgeting software or apps

• Ignoring your expenses

• Setting up automatic transfers to savings

What is the "debt snowball" method?

• Paying off the smallest debts first to gain momentum

• Consolidating all debts into one payment

• Paying off the debt with the highest interest rate first

• Ignoring all small debts and focusing on the largest one