Why is tracking your expenses throughout the month important?

It gives you insight into whether you're sticking to the budget you set.

It allows you to delete categories you don't like.

It helps you pull money from your savings to spend in other categories.

It really isn't that important in the long run.

What kind of money counts as income?

All money that you receive, including money from your job and gifts like birthday money

Only the money you make at your job

Only money deposited into your bank account

What is a way to stay accountable to reaching your financial goals?

Finding a person you trust to help keep you on track with your money goals

Hiring a financial advisor to make your decisions about money for you

Looking at the budget you set at the end of the month

Creating specific categories in your budget

A common misconception is that budgeting will keep you from having fun, when in reality a budget . . .

Means there are no rules—you are free to use your money however you want

When is the right time to start creating and living by a budget?

Right now - it's never too early!

When you start researching colleges and the costs that come along with it

Once you have a job with an income

When you decide it's time to buy a car

What should you do if you overspend in one category of your budget?

Adjust your budget by removing money from other spending categories.

Just leave it. It will probably work out fine.

Take money from the Giving category. You're giving to yourself!

Ask a friend for the money you overspent.

The best way to budget is...

The way that works best for you

What is the envelope system?

It's a method of budgeting that uses envelopes labeled with specific budget categories for your cash.

It's a systematic approach to budgeting with a digital app that organizes categories based on qualitative amounts.

It's a way to budget that involves putting a credit card in each envelope to use for that category.

It's a system that involves writing your entire budget on an envelope.

Why is budgeting so important?

It gives you control of your money and sets you up for financial success in the future.

It's a good way to make sure all your money is spent by the end of the month.

It helps you figure out the best way to justify purchases that maybe aren't necessary.

It helps you brush up on your math skills.

Explain the difference between a fixed expense and a variable expense, and include an example of each.

A fixed expense is a cost that does not change from month to month, such as rent, while a variable expense can fluctuate, like utility bills.

A fixed expense is a cost that changes frequently, such as groceries, while a variable expense remains constant, like a subscription service.

A fixed expense is a one-time cost, like buying a car, while a variable expense is a recurring cost, like rent.

A fixed expense is a cost that can be negotiated, like a phone bill, while a variable expense is a non-negotiable cost, like taxes.

Irregular income can be described as:

Income that is unpredictable and varies in amount

Income received at regular intervals

Income that is fixed and does not change

Income that is received monthly

A budget is considered a zero-based budget when:

it starts from a zero base and every expense must be justified.

it is based on the previous year's budget with adjustments.

it only includes fixed expenses.

it is created without any input from department heads.

Cash-flow statements explain how they work and what specifically they show you. Which of the following is an example of how a cash flow statement will help you adjust your budget for the following month?

Identifying surplus cash to invest

Calculating annual tax liability

Determining long-term investment strategies

Evaluating employee performance

Chapter 2 Test

Authored by Jena Meinerding

Life Skills

12th Grade

Used 2+ times

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34 questions

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MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Although the majority of Americans think budgeting is important, about of Americans actually use a budget.

35%

25%

50%

75%

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is NOT a component of a budget?

A. Credit score

B. Saving

C. Income

D. Giving

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Online budgeting apps are more effective than budgeting with pen and paper.

True

False

MULTIPLE SELECT QUESTION

30 sec • 1 pt

What are the Four Walls?

Utilities, college fund, restaurants, and car insurance

Cell phone bill, car insurance, shelter, and money for the movies

Food, utilities, transportation, and college fund

Food, utilities, shelter, and transportation

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How often should you create a budget?

Daily

Weekly

Monthly

Biannually

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If you get married, only one person is responsible for budgeting.

True

False

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What does a budget show you?

How much you need to save

How much money you plan to come in and go out during the month

How much money you need to earn

How much money you spent last month

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Chapter 2 Test

Although the majority of Americans think budgeting is important, about of Americans actually use a budget.

Which of the following is NOT a component of a budget?

Online budgeting apps are more effective than budgeting with pen and paper.

What are the Four Walls?

How often should you create a budget?

If you get married, only one person is responsible for budgeting.

What does a budget show you?

Detailed categories on your budget will help you make better spending decisions.

A budget says what will happen with your money, while a cash-flow statement shows what already happened.

How many months does it usually take for your budget to start working as a budget should?

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