E1-E3 Review

Which statement BEST explains the purpose of a budget?

• A budget limits how much you can spend
• A budget enables you to track and adjust your spending and saving
• A budget is the only way that people can save money
• A budget shows what expenditures are flexible

Which of the following are considered to be acceptable uses of debt? Select 3

• Using a credit card to pay college tuition

• Getting a loan from the bank for a house

• Getting a small business loan to open a new coffee shop

• Getting a low-interest student credit card to purchase a MacBook for school

• Borrowing money from your older brother/sister to buy the new iPhone 15

Money received for labor or services, the sale of property or goods, gained through financial investments or other services is called

• income
• household budget
• savings
• debt
• interest

Setting aside funds for future use is called...

• savings
• income
• household budget
• debt
• interest

An amount of money borrowed that is owed or due (the state of owing money)

• debt
• income
• household budget
• savings
• interest

Having a plan for spending is called...

• budget
• income
• savings
• debt
• interest

What is the starting point for personal financial management?

• opening a bank account
• saving part of your monthly income
• developing a budget
• acquiring income by obtaining employment

Which of the following BEST describes the risk of using a mortgage to purchase a house?

• A person could lose the house if the house were to catch on fire
• A person could find a better home later that he or she would rather live in
• A person could lose the house if he or she cannot make the monthly payments
• A person could find a better interest rate later but not take advantage of it

What is the first step in creating a budget?

• Calculate expected expenses
• Determine short-term goals
• Calculate expected income
• Determine long-term goals

Anna uses her credit card for everything she buys each month. What risk does she take by doing this?

• She might not be able to repay the debt and have to file for bankruptcy

• She might pay for items she does not want and will be unable to return them

• She might lose some of her receipts, which will make it difficult to pay her credit card bill

• She might get a higher interest rate on her credit card because she makes so many purchases