5/10 Financial Literacy Basics

What is the first step towards achieving financial literacy?

• Understanding the stock market

• Investing in mutual funds

• Learning about different types of debts

• Creating a personal budget

What rule is suggested for managing your monthly income?

• 80/10/10 rule

• 50/30/20 rule

• 60/30/10 rule

• 70/20/10 rule

What percentage of your income should go towards savings or debt repayment according to the 50/30/20 rule?

• 30%

• 60%

• 20%

• 50%

What does the 50/30/20 rule suggest you spend 50% of your income on?

• Savings

• Bills and housing

• Luxuries

• Entertainment

Why is it important to make savings a fixed expense?

• To avoid spending it unnecessarily

• To cover unexpected expenses

• All of the above

• To ensure money is available for investments

What is a key benefit of investing in a diversified portfolio?

• Protection against losses

• Fixed returns

• None of the above

• Guaranteed profits

What is the main reason for diversifying investments?

• To increase complexity

• To reduce risk

• To focus on one sector

• To simplify decisions

Why is it important to start saving early?

• To take advantage of compound interest

• To spend more later

• To avoid working

• To invest in education only

What is considered a good use of credit?

• All of the above

• Purchasing consumables

• Buying assets like a home

• Spending on vacations

What is a major consequence of accumulating excessive credit card debt?

• Loss of financial freedom

• Increased savings

• Decreased financial stress

• Improved credit score