Terminology Review 3 - Budgeting

What is the 50/30/20 Budget method?

• A budgeting method that allocates 50% to needs, 30% to wants, and 20% to savings and debt repayment.

• A budgeting method that allocates 50% to savings, 30% to needs, and 20% to wants.

• A budgeting method that allocates 50% to debt repayment, 30% to savings, and 20% to needs.

• A budgeting method that allocates 50% to wants, 30% to savings, and 20% to needs.

What is a Budget?

• A plan of your expected income and how you will use it to meet your expected expenses over a period of time.

• A method of saving all your income without spending.

• A strategy to invest all your income in stocks.

• A plan to spend all your income on luxury items.

What is the Cash Envelope Budget method?

• A budgeting method where money for monthly spending is taken out in cash and placed in labeled envelopes according to budget categories.

• A budgeting method where all money is kept in a single envelope.

• A budgeting method where money is only spent using credit cards.

• A budgeting method where money is saved in a bank account.

What does "Cost of Living" refer to?

• The amount of money needed to sustain a certain level of living, including basic expenses.

• The total amount of money saved in a bank account.

• The amount of money spent on luxury items.

• The total income earned in a year.

What is a "Deduction" in terms of a paycheck?

• An additional bonus added to your paycheck.

• Any items subtracted from your paycheck, including taxes and contributions.

• The total amount of your paycheck before taxes.

• The amount of money you receive after all expenses.

What does "Deficit" mean in financial terms?

• When your income exceeds your expenses.

• When your expenses exceed your income.

• When your savings are equal to your expenses.

• When your income and expenses are balanced.

What is a "Down Payment"?

• The full cost of an item paid at the time of purchase.

• A portion of the total cost of an item paid at the time of purchase.

• The amount borrowed to finance an item.

• The interest paid on a loan.

What is an Emergency Fund?

• Money set aside for unanticipated expenses or loss of income.

• Money used for daily expenses.

• Money invested in stocks.

• Money saved for a vacation.

What are Expenses?

• Items or services you pay for such as rent, groceries, entertainment, bills, etc.

• Money saved for future use.

• Income received from investments.

• Funds allocated for emergencies.

What is a Fixed Expense?

• A cost that can be expected at regular intervals and that remains the same amount.

• A cost that varies each month.

• An unexpected cost.

• A cost that decreases over time.