Budgeting and Financial Planning Quiz

What is gross income?

• The total amount you have earned before deductions such as taxes and insurance.

• The amount you take home after all deductions.

• If the bank teller gives you old, disgusting bills.

• The income after costs and deductions are factored in.

What does net income mean?

• The total revenue before any deductions.

• If the bank teller gives you your money in a net.

• What one actually takes home after all deductions are made.

• The total salary a person earns before taxes.

What is the key consideration when applying the 50/30/20 rule to your income?

• It should be applied before taxes are deducted

• It should be applied after taxes are deducted

• It should be applied only to bonuses

• It should be applied to gross income

What percentage of the net income is suggested to be saved?

• 20%

• 30%

• 50%

• 10%

How do you calculate the net income from a gross income?

• Subtract the tax amount from the gross income

• Add the tax amount to the gross income

• Multiply the gross income by the tax rate

• Divide the gross income by the tax rate

In the low-to-high (snowball) method, what is the initial focus when paying down debt?

• Pay extra on the largest debt first

• Pay extra on the smallest debt first

• Pay all debts equally

• Pay extra on accounts with the highest interest rate first

What are the two most common ways to borrow money?

• Savings and Investments

• Loans and Credit Cards

• Stocks and Bonds

• Grants and Scholarships

What is a disadvantage of borrowing money?

• Ability to make larger purchases

• Interest fees

• Not having to carry cash

• Consolidating bills

What does it mean when someone is unable to repay their debt?

• They are investing

• They are defaulting

• They are saving

• They are consolidating

What is a common mistake young adults make when signing up for credit cards?

• Signing up for too many credit cards

• Not signing up for any credit cards

• Only using cash for purchases

• Ignoring credit card offers