Budgeting & Taxes Test Review

You earn a salary of $40,000 per year and decide to save 20% of your gross pay. You set a goal of creating a $16,000 emergency fund. How long will it take for you to achieve your goal?

• 6 months

• 1 year

• 2 years

• 3 years

Isaiah has a summer internship at a technology company and is paid $3,000. After Federal and state taxes, Social Security, and Medicare are deducted, his take-home pay is $2,500. Which of the statements below is correct?

• His gross pay is $2,500 and net pay is $3,000

• His gross pay is $3,000 and net pay is $2,500

• His gross and net pay are $2,500

• His gross pay is $3,000 and net pay is $2,500

You are putting together your first post-graduation budget. Your net pay is $2,500 per month and you estimate that your monthly expenses will be $2,625. How would you describe your budget?

• You have a surplus of $125

• You have a deficit of $125

• You have a deficit of $2,625

• You have a surplus of $2,500

Which description is most accurate for a Zero-Based Budget?

• You put every dollar of your net pay into a budget category each month

• You spend your checking account balance down to $0 every month

• You spend your saving account balance down to $0 every month

• You pay every one of your debts down to $0 every month

For two months in a row, Aaron realizes he has a budget deficit of roughly $175. Which of these options makes the most sense for him to fix his problem?

• Cancel one of his streaming video subscriptions and go out to dinner three fewer times each month with friends

• Start paying just the minimum monthly payment on his student loan and credit card debt, instead of the extra he's been contributing

• Contribute $100 less to savings each month and $75 less to his retirement fund

• Sell his current car and get a less expensive vehicle

You're considering moving into a 3 bedroom apartment with 2 roommates, rather than living on your own post-college. Which of your expenses would likely decrease by having roommates?

• Groceries and eating out

• Rent

• Cell phone bill

• Bedroom furniture

What is one thing someone can do to budget more effectively?

• Shop impulsively whenever they come across a social media ad

• Update their budget only in months where they spend less

• Dine out frequently at restaurants and order delivery

• Experiment with different budgeting methods to find one that works best for them

Which one of these expenses most likely represents a VARIABLE cost in someone's budget?

• Electricity bill

• Rent

• Car insurance premium

• Student loan payment

What action corresponds to the advice "Pay yourself first?"

• Wait until the end of the month to determine how much you have leftover to save

• Set aside a fraction of your paycheck into a savings account before you start spending

• Spend your regular paycheck on needs and wants but funnel any extra money into saving

• Become self-employed so you're paying yourself instead of being paid by an employer

Which statement accurately describes how the 50/20/30 Rule would break down your take-home pay?

• 50% on wants, 20% on saving, and 30% on needs

• 50% on saving, 20% on needs, and 30% on wants

• 50% needs, 20% on saving, and 30% on wants

• 50% on saving, 20% on wants, and 30% on needs