WorksheetsFoundations in Personal Finance - Ch.2 Review
Total questions: 37
Worksheet time: 19mins
Although the majority of Americans think budgeting is important, about _______ of Americans actually use a budget.
75%
50%
23%
35%
Which of the following is NOT a component of a budget?
Credit score
Saving
Income
Giving
Online budgeting apps are more effective than budgeting with pen and paper.
True
False
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
How many categories should you have in your budget?
15 or more
No limit; use as many as you need to keep your budget accurate!
No more than 10
At least 3
How often should you create a budget?
Daily
Weekly
Monthly
Biannually
If you get married, only one person is responsible for budgeting.
True
False
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
Detailed categories on your budget will help you make better spending decisions.
True
False
A budget says what will happen with your money, while a cash-flow statement shows what already happened.
True
False
How many months does it usually take for your budget to start working as a budget should?
Three
Five
Four
One
Your money personality can affect your ______.
Attitude toward budgeting
Choice of bank
Personal values
Ability to budget
Research shows that nearly half of Americans (46%) feel stress and anxiety about the amount of ______ they have.
Money
Debit cards
Categories in their budget
Personal debt
Going to the movies is an example of what types of expenses?
Intermittent and variable
Discretionary and variable
Discretionary and fixed
Intermittent and fixed
Net income is the amount you get paid before taxes.
True
False
Why is tracking your expenses throughout the month important?
It allows you to delete categories you don't like.
It gives you insight into whether you're sticking to the budget you set.
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?
Only the money you make at your job
All money that you receive, including money from your job and gifts like birthday money
Money in your savings account
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 . . .
Adds more stress to your life
Means there are no rules—you are free to use your money however you want
Restricts your fun completely
Gives you permission to spend
The first priority in your budget should be ______.
Giving
Spending
Saving
Investing
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.
Commission is when you make money based on the percentage of ______.
Total sales
Investments
Budgets
Items sold
What is a good way to make sure you're creating a budget that's realistic?
Make sure you create a budget every single day.
Make sure your budget is perfect before starting. If it isn't just right, don't use it.
Check your calendar so you can plan for upcoming monthly expenses.
Make sure you have enough money in your savings account to pull from if you overspend.
The primary reason people don't budget is because they lack the behavior to stick to a budget.
True
False
Your monthly rent payment is an example of a variable expense.
True
False
The best way to budget is...
By using a digital app
Creating a spreadsheet
The way that works best for you
On paper
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.
If you have an irregular income, budgeting won't work for you.
True
False
Why is budgeting so important?
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 gives you control of your money and sets you up for financial success in the future.
It helps you brush up on your math skills.
The Four Walls are essential categories in a budget. Which of the following lists them correctly and states their priority?
Food, Utilities, Shelter, Transportation; they are the top priority in your budget.
Entertainment, Travel, Savings, Clothing; they are the lowest priority in your budget.
Investments, Insurance, Education, Dining Out; they are the top priority in your budget.
Gifts, Subscriptions, Vacations, Electronics; they are the top priority in your budget.
A fixed expense is a cost that does not change each month, such as rent, while a variable expense changes from month to month, such as groceries. Which of the following pairs correctly matches a fixed expense and a variable expense?
Rent and groceries
Groceries and rent
Utilities and rent
Entertainment and rent
Key components of successful budgeting include:
Setting financial goals, tracking expenses, creating a spending plan, and reviewing progress
Ignoring expenses, spending impulsively, and avoiding financial planning
Relying solely on credit cards for all purchases
Focusing only on income without considering expenses
Irregular income refers to earnings that are not received on a consistent schedule. Which of the following is an example of irregular income?
Freelance payments received at different times
Monthly salary from a full-time job
Weekly allowance from parents
Fixed pension received every month
A budget is considered a zero-based budget when:
every dollar of income is assigned a specific purpose until nothing is left unallocated.
expenses are estimated based on the previous year’s budget.
only fixed expenses are included in the budget.
the budget is reviewed once a year.
An example of an unexpected expense that may occur is a car repair. How would you adjust your budget to ensure that you don't overspend that month?
Reduce spending in other categories to cover the expense
Ignore the expense and continue spending as usual
Take out a large loan for every small expense
Increase spending in all categories
A cash-flow statement shows which of the following?
The inflow and outflow of cash in a business over a specific period, helping to adjust budgets for the next month.
The total profit earned by a business in a year.
The list of all assets owned by a business.
The amount of taxes paid by a business.
