Personal Finance Assessment

What is the primary purpose of creating a budget?

• To track your spending habits

• To plan how to allocate your income

• To increase your credit score

• To reduce your debt

Which of the following is considered a fixed expense in a budget?

• Groceries

• Rent

• Entertainment

• Dining out

What is an emergency fund?

• Money set aside for vacations

• Money set aside for unexpected expenses

• Money set aside for investments

• Money set aside for paying off debt

What is the recommended percentage of your income to save each month?

• 5%

• 10%

• 20%

• 30%

Which type of account typically offers the highest interest rate for savings?

• Checking account

• Savings account

• Certificate of Deposit (CD)

• Money market account

What is the main benefit of compound interest?

• It reduces your debt

• It increases your savings faster over time

• It lowers your monthly expenses

• It improves your credit score

Which of the following is a low-risk investment option?

• Stocks

• Bonds

• Real estate

• Cryptocurrency

What does diversification in investing mean?

• Investing all your money in one stock

• Spreading your investments across different asset classes

• Investing only in real estate

• Keeping all your money in a savings account

What is a stock?

• A loan to a company or government

• A share of ownership in a company

• A type of savings account

• A form of insurance

What is a credit score?

• A measure of your income

• A measure of your creditworthiness

• A measure of your savings

• A measure of your investments