Budgeting Basics

What is the first step in creating a personal budget plan?

• Estimating monthly expenses

• Setting financial goals

• Tracking past spending

• Differentiating between needs and wants

Which of the following is a need rather than a want?

• A new smartphone

• Dining out at restaurants

• Rent or mortgage payments

• A gym membership

What is the purpose of setting financial goals when budgeting?

• To ensure you spend all your income each month

• To guide your spending and saving decisions

• To differentiate between needs and wants

• To track your expenses more accurately

Which of the following is a benefit of tracking your expenses and income?

• It allows you to spend more freely.

• It helps identify areas where you can save.

• It eliminates the need for a budget.

• It increases your expenses.

How often should you review and adjust your budget?

• Once a year

• Every month

• Every week

• Only when your financial situation changes

What is a realistic financial goal?

• Buying a new car with cash in one month

• Saving 10% of your income each month

• Doubling your income in six months

• Eliminating all wants from your spending

Why is it important to differentiate between needs and wants when budgeting?

• To spend more on wants

• To prioritize spending on needs

• To eliminate all wants

• Wants are more important than needs

What tool can be most effective for tracking expenses and income?

• A mental note

• A spreadsheet

• A physical ledger

• All of the above

Which of the following is a characteristic of a well-defined financial goal?

• Vague

• Unattainable

• Time-bound

• Constantly changing

What should you do if you consistently overspend in a certain category of your budget?

• Eliminate the category entirely

• Adjust your budget to reflect your actual spending

• Ignore the overspending

• Borrow money to cover the difference