finance night funking

Why should I create a budget?

• To make a plan for my money

• To predict the stock market

• To spand as much as I can and live in the moment without going into debt

• To save as much as I can and cut out every non-essential expense

Answer explanation

A budget is a guide that keeps you on the path to reach your financial goals. Budgeting keeps your finances under control, shows when you need to make adjustments to your spending, and helps you decide where your money goes instead of wondering where it all went.

from studentaid.gov

What are some things an emergency fund would cover?

• Anything I deem an emergency

• Rent if I get fired

• Paying off credit card debt

• A blown out tire

Answer explanation

An emergency fund is a cash reserve that’s specifically set aside for unplanned expenses or financial emergencies. Some common examples include car repairs, home repairs, medical bills, or a loss of income.

In general, emergency savings can be used for large or small unplanned bills or payments that are not part of your routine monthly expenses and spending.

-consumerfinance.gov

What is the 50/30/20 budgeting rule?

• 50% needs, 30% savings, 20% wants

• 50% needs, 30% wants, 20% savings

• 50% savings, 30% needs, 20% wants

• 50% wants, 30% savings, 20% needs

Answer explanation

The 50-30-20 rule involves splitting your after-tax income into three categories of spending: 50% goes to needs, 30% goes to wants, and 20% goes to savings.

-investopedia.com

Which of the following is NOT a smart savings strategy?

• Plan the amount you'll save in your budget, and follow that

• Set aside savings before spending on other expenses

• Maintain a balance between saving for the future and enjoying today

• Save in a checking account for easy access

Which of the following is an example of a variable expense?

• Car Payment

• Rent

• Groceries

• Gym Membership

Answer explanation

Variable expenses are costs that change over time. Fixed expenses typically stay the same and can be easier to plan for.

-nerdwallet.com

What does APR stand for?

• Account Payment Ratio

• Average Payment Return

• Annual Payment Rate

• Annual Percentage Rate

Answer explanation

The APR is the interest rate plus any additional fees charged by the lender. This includes origination charges and other fees charged when the loan is made.

-consumerfinance.gov

What happens if you pay the minimum due on your credit card?

• You incur interest on the remaining balance

• You improve your credit score

• Your balance decreases faster

• You declare bankruptcy

Answer explanation

If you only pay the minimum due on your credit card, the remaining balance may accrue interest and increase your credit utilization, which could negatively affect your credit scores and make it harder to get out of debt.

-experian.com

Which of the following impacts your credit score the most?

• Payment History

• Length of credit history

• Types of credit used

• Credit inquiries

Answer explanation

The two major scoring companies in the U.S., FICO and VantageScore, differ a bit in their approaches, but they agree on the two factors that are most important. Payment history and credit utilization, the portion of your credit limits that you actually use, make up more than half of your credit scores. Focus your attention mostly on those two while keeping an eye on the other factors.

How often are you entitled to a free credit report from each of the major credit bureaus?

• Once a year

• Twice a year

• Three times a year

• Every month

Answer explanation

By law, you can get a free credit report each year from the three credit reporting agencies (CRAs). These agencies include Equifax, Experian, and TransUnion.

-usa.gov

What happens if you close a credit card account that you’ve had for a long time?

• Your credit score goes up because you've demonstrated you're not actively seeking credit

• Nothing

• Your credit score might go down because you lose some credit history.

Answer explanation

Closing a credit card can hurt your credit, especially if it's a card you've had for years. An account closure can cause a temporary hit to your credit by increasing your credit utilization, lowering your average age of accounts and possibly limiting your credit mix.

-experian.com