Personal Finance Exam Review

What is a Budget?

• A budget is a special bank account where someone stores their money

• A Budget is a tool to plan the spending and saving of your income

• A Budget is money that is set aside in a seperate savings Account

• A Budget is the Money that a person earns through their job

Why do people make personal budgets?

• 1. to help them determine how to earn more resources

• 1. to help them determine how to earn different resources

• 1. to help them determine the best way to use a limited resource

• 1. to help them determine the best way to use an unlimited resource

Bethany wants to create a monthly budget. In order to do this, what will she need to know?

• 1. The difference between bonds and stocks

• 1. Her monthly income and expenses

• 1. Her savings account’s interest rate

Which scenario best shows the impact of saving? Justify your decision.

• Scenario A Jill used money she earned from babysitting to purchase new skins on Fortnite.

• Scenario B Jasmine used money from her piggy bank to purchase a new bike.

Which statement best explains the importance of having a budget? Why?

• Statement C Stanley wants to go on vacation. He realizes he hasn’t been saving money for a vacation, but he did make a budget where he saved for a trip.

• Statement D Serena has to buy new cheerleading shoes for her daughter; she left them out in the rain. The shoes cost $100, money she hadn’t budgeted for. But she does have a “rainy day” fund.

The idea of a budget is to spend exactly as much as you spend.

• True

• False

3. Who actually paid more for their purchase? How do you know?

• Scenario E Mrs. Johnson purchased a new car. She is paying 9.5% annual interest over 5 years on a $20,000 car. She ends up paying $31,484.77 for the car.

• Scenario F Mrs. Smith purchased a $100,000 home at 2.3% annual interest over 15 years paying a total of $118,335,60 for the house.

Which scenario likely describes someone who would earn a higher income?

• Scenario G Sarah works for a commissionsbased tech company. They’re doing very well. She works fewer than 40 hours a week and usually only works during normal business hours. There are very few people who can do her job because it requires a master’s degree..

• Scenario H Jorge is a salaried worker. He can sometimes earn bonuses. He works extended hours including holidays and weekends. Additionally, his position requires a college degree, but, many people work in this field with that degree.

For which of the following should you save?

• purchases
• emergency fund
• wealth building
• all the above

An 8th grader makes and sells earrings as a way to earn extra money. The money she gets is considered _______.

• Needs
• Wants
• Income
• Expenses