Budgeting and Spending

Which of the following elements is NOT part of the 50/30/20 Rule?

• Wants

• Needs

• Car payments

• Savings

What is the purpose of creating a budget?

• To spend money lavishly

• To track income and expenses

• To limit financial goals

• To ignore financial planning

Which of the following is NOT a step in the Rational Decision-Making Process mentioned in the text?

• Define the problem or opportunity

• Identify alternatives

• Determine financial needs

• Choose the best alternative

How often should you update the document tracking your sources of income?

• Annually

• Quarterly

• Monthly

• Biweekly

What equation represents the relationship between savings, income, and expenses?

• Savings = Income + Expenses

• Savings = Income - Expenses

• Savings = Income / Expenses

• Savings = Expenses - Income

Which of the following is an example of a fixed expense?

• Entertainment

• Car repairs

• Auto insurance

• Dining out

What is discretionary income?

• What a household or person has left after essentials have been paid, to invest, save, or spend

• Money for essential purchases

• Money spent on wants

• Money spent on needs

How should you categorize your budget for prioritization?

• Alphabetically

• By size

• By priority

• Randomly

Which of the following is NOT a step in managing your budget effectively?

• Checking it monthly

• Writing down all your expenses

• Ignoring technology

• Categorizing expenses

What factor should you consider before deciding on transportation?

• Weather conditions

• Your favorite color

• Your location

• Public opinion