Financial Literacy Quiz

What is the main purpose of creating a budget?

• To increase your income

• To plan and control your spending

• To eliminate all expenses

• To calculate your taxes

Which of the following is considered a fixed expense?

• Monthly rent

• Groceries

• Utility bills

• Entertainment

What is the difference between gross income and net income?

• Gross income includes taxes; net income does not.

• Net income includes expenses; gross income does not.

• Gross income is before taxes; net income is after taxes.

• There is no difference between gross and net income.

What percentage of your income is generally recommended to save?

• 5%

• 10%

• 20%

• 25%

Which of the following is NOT an essential expense?

• Rent

• Food

• Streaming service subscription

• Utility bills

What is the formula for calculating your disposable income?

• Gross income - savings

• Gross income - taxes

• Net income - fixed expenses

• Net income - discretionary expenses

What is an example of a variable expense?

• Mortgage payment

• Grocery shopping

• Health insurance premium

• Gym membership

What is the 50/30/20 rule of budgeting?

• 50% for essentials, 30% for debt, 20% for entertainment

• 50% for savings, 30% for investments, 20% for essentials

• 50% for needs, 30% for wants, 20% for savings

• 50% for fixed costs, 30% for variable costs, 20% for taxes

What is considered an emergency fund?

• Money saved for medical emergencies only

• Money saved for a down payment on a house

• 3–6 months’ worth of living expenses saved

• A fund specifically for vacations

Which of the following is an effective way to increase savings?

• Spend less on needs

• Set up automatic transfers to a savings account

• Avoid all discretionary spending

• Work more hours