Mastering Personal Finance Basics

What is the primary purpose of creating a personal budget?

• To track your spending habits

• To ensure you spend more than you earn

• To avoid paying taxes

• To increase your credit card debt

Which of the following is considered a fixed expense?

• Groceries

• Rent

• Entertainment

• Clothing

If you earn $500 per month and save 20% of your income, how much do you save each month?

• $50

• $100

• $200

• $250

What is the formula to calculate simple interest?

Which of the following is a benefit of having an emergency fund?

• It allows you to invest in high-risk stocks

• It helps cover unexpected expenses

• It increases your monthly expenses

• It reduces your savings

What is the main advantage of using a credit card responsibly?

• It allows you to spend without limits

• It helps build your credit score

• It eliminates the need for a budget

• It increases your debt

Which of the following is a variable expense?

• Mortgage payment

• Utility bills

• Car insurance

• Internet subscription

What is the term for the amount of money you owe on a loan?

• Principal

• Interest

• Equity

• Dividend

What is the benefit of setting financial goals?

• It helps you spend more money

• It provides direction for your savings and investments

• It increases your debt

• It eliminates the need for a budget

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

• Rent

• Dining out

• Car payment

• Health insurance