Mastering Personal Finance Basics

What is the primary purpose of creating a budget?

• To track your daily activities

• To manage your income and expenses

• To increase your credit score

• To find new investment opportunities

Which of the following is a common saving strategy?

• Spending all your income

• Saving a fixed percentage of your income each month

• Borrowing money to save

• Investing in high-risk stocks

What is credit?

• Money you owe to others

• A score that measures your financial health

• The ability to borrow money or access goods or services with the understanding that you'll pay later

• A type of investment

Which of the following is a fundamental principle of investing?

• Always invest in a single stock

• Diversify your investments to spread risk

• Invest only in what your friends recommend

• Avoid investing in bonds

What is a financial goal?

• A plan to spend all your money

• A target or objective you aim to achieve with your money

• A list of all your debts

• A record of your daily expenses

Which of the following is a good debt management strategy?

• Ignoring your debts

• Paying only the minimum amount due

• Creating a plan to pay off debts systematically

• Taking on more debt to pay off existing debt

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

• 50% needs, 30% wants, 20% savings

• 50% savings, 30% needs, 20% wants

• 50% wants, 30% savings, 20% needs

• 50% needs, 30% savings, 20% wants

Which of the following is NOT a saving strategy?

• Setting up an emergency fund

• Spending more than you earn

• Automating savings transfers

• Cutting unnecessary expenses

What does a credit score represent?

• Your total income

• Your ability to repay borrowed money

• The amount of money you have saved

• The number of credit cards you own

What is the main benefit of investing early?

• Higher risk of losing money

• More time for your investments to grow

• Less time to learn about investing

• Immediate high returns