Exam Review (Budgeting) - 2024

You are putting together your first post-graduation budget. Your take-home pay will be $2,500 per month. You estimate your monthly costs to be rent of $800, car payment of $350, car insurance of $150, car maintenance of $50, entertainment of $500, food expense of $250, mobile phone of $75, student loan payment of $225 and other expense of $300. How would you describe your budget after analyzing all of your income and expenses?

• You have a surplus of $200
• You have a deficit of $200
• You have a deficit of $2,700
• You have a surplus of $5,200

You are interested in renting an apartment for your senior year in college. You meet with the landlord, complete the application, and after checking your credit background and references, the landlord approves your application. In most cases, you will need to provide the landlord with _________ at the time you sign the lease in order to get the apartment.

• Rent payment for the first three months
• First month's rent and a security deposit
• An additional list of references and copies of your last three tax filings
• A $500 bonus payment for awarding you the apartment

For most Americans, which budget expense category is largest?

• Housing
• Food
• Transportation
• Clothes

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

• You put every dollar of your take-home 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

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

Some people experience great success when using budgeting apps to help them meet their goals. Why might this be the case?

• The app store guarantees you'll save money -- if you don't, they'll refund your money
• Because users carry their phones almost everywhere, budgeting becomes fast and convenient
• Apps are better at doing complex budget calculations than spreadsheets
• Most budgeting apps deposit extra funds into your account on a quarterly basis

One benefit of buying a car vs. leasing is...

• You'll have higher monthly payments than a lease
• The car will have better safety ratings
• You're always protected by a warranty
• You can build up trade-in or resale value

While NEEDS and WANTS can vary greatly depending on the individual and their situation, which of these items would most people agree to be a NEED?

• Safe, reliable childcare for a single parent so they can go to work
• A new cell phone every two years for a college student so they can keep in touch with family
• Stylish clothes for a teenager so that they fit in with popular kids at school
• Three weeks of vacation for a corporate executive so they can unwind from work

Melvin uses an Envelope Budget and has just received his paycheck. How much cash should he take out?

• None -- he is trying to save money!
• Enough to cover his fixed expenses
• A tiny bit to spend on wants -- he can always return to the ATM if he runs out
• Enough to cover his variable expenses