Understanding Financial Literacy

What is financial literacy?

• deciding that wants are more important than needs

•  Expenses you don’t have to pay
  

• The ability to understand and manage money wisely

• overspending and not saving

  for the future

What is the definition of a budget?

• a) A plan for spending and saving money
  

• b) A type of bank account
  
  

• c) Money given by parents for free
  

• d) A list of expenses only

Why is planning a budget important?

• a) To spend all your money quickly
  

• b) To avoid overspending and save for the future

• c) To have more wants than needs
  

• d) To ignore income and expenses

What is income?

• a) Money you spend
  

• b) Money you save
  

• c) Money you earn or receive

• d) Money borrowed from a bank
  

What are fixed expenses?

• a) Expenses that stay the same each month

• b) Expenses that change each month
  
  

• 
  c) Expenses you don’t have to pay
  
  

• 
  d) One-time payments only
  

A ______ is a plan for spending and saving money.

Which of the following is a variable expense?

• a) Rent
  
  

• b) Car payment
  

• c) Electricity bill

• d) Mortgage

What is the difference between needs and wants? a) Needs are necessary for survival; wants are extra ✅
b) Wants are more important than needs
c) Needs cost more than wants
d) Wants are fixed expenses

• a) Needs are necessary for survival; wants are extra

• b) Wants are more important than needs
  

• c) Needs cost more than wants
  

• d) Wants are fixed expenses

What is an example of an opportunity cost?

• a) Buying a toy instead of saving money

• b) Getting free money from a friend
  

• c) Spending all your money without choices
  

• d) Keeping money in your pocket
  

The difference between needs and wants is that needs are _________ for survival, while wants are not.