Budget quiz personal finance

How much more do families spend on transportation than on food?

$1,847 = 9576-7729

"Some cars may be cheaper to buy but more expensive to own." Explain how this can happen.

A car may cost more to insure or maintain. It may also depreciate in value faster than a more expensive car.

How does financing from a bank or credit union differ from financing from a dealership?

Bank/Credit Union/Other financial institution (Direct Lending): You can comparison shop; allows you to get your credit terms in advance so you can use it to negotiate at the dealership Dealership: can be move convenient; you might have different financing options; can be offered exclusive programs

How can budgeting impact your overall wealth?

Budgeting can increase your overall wealth by leaving less debt to subtract from the assets you have.

When deciding if you should buy something, what can you ask yourself to determine if the item is a need or want?

Can I still function in life without this?

What are the benefits of creating a roommate agreement?

It formalizes the logistics agreed upon by the roommates in the case of a dispute.

How do you think keeping a budget can impact your overall wealth?

Keeping a budget allows me to not have as much debt. With less debt subtracted from my assets, my overall wealth is increased.

Despite these six reasons for keeping a budget, many people do not have a budget. Why do you think this is?

Keeping a budget could allow you to not have as much debt and with less subtracted from my assets, my overall wealth is increased.

What do you think Alana's goals should be?

Saving $3,000 over the next year which will allow her to focus on her studies while at college and minimize the amount of student loans she would need to take on

Identify one advantage of living with a roommate or housemate.

Share the cost of living (furnishings, rent, etc.)

Alana only has $56.47 saved for college. Brainstorm possible reasons why she has only managed to save amount.

She has no idea where she is spending her money She buys any time she wants something and doesn't prioritize saving first She has a lot of necessary or unnecessary expenses every month -- subscription services, gas/insurance, hobbies, etc. She has not developed a savings habit as all she has to show after 3 years of part time work is an account with $50 balance

What strategies were most effective during the "haggling" process (select 4)? Why do you think they were effective?

The salesman names the first price, so that you can make sure you are not starting too high. Drop the name of a pricing guide like Kelly Blue Book or Edmunds, so the dealer knows you've done your research. Bring someone to be negative about the price and the car which is helpful because it makes the salesman believe you might walk and that they really have to entice you to buy Leave altogether if they do not offer you the price that you were hoping for to send the message that they cannot control you. In the video, the car dealer called the buyer back 3 times after he left. Always shop at multiple dealerships and make sure that the salesmen know that, so that they will lower their prices to get you to buy a car from them and not from another dealer.

Describe one method of keeping track of all of your expenses in a month.

Using an application like Mint that keeps a tally on where you are spending can help keep track of all your expenses in a month

Write in the 14 factors mentioned within the article about what to consider when looking for a place to live

affordability employment opportunities real estate value crime rates and statistics education system culture proximity to family and friends transportation options and commuting food options size; town and city size health care airport

What are the steps when finding a car

assess you needs set up your budget decide - lease or buy consider other cars cost of ownership find cars for sale test drive the test drive pick your car purchase or lease

What expenses would you expect to stay the same month after month? Which would vary most month to month?

housing (e.g., rent or mortgage) and transportation (car payment, cost of public transportation) to stay the same. Food may stay the same as well if they're sticking to a strict budget. Healthcare (unforeseen medical bills), entertainment, and apparel to be more varied.

Give one reason for why it is important to create, and stick to, a budget.

it is important to create and stick to a budget because it ensures you don't spend the money you don't have. Many consumers spend money that they don't have and then are stuck with debt. With a budget, people can see how much money they can really spend and not be in debt.

Your cousin graduated from college and got an intro-level job in human resources at a large company in Washington, DC. Leftover from college, they have one nice suit, a few business appropriate shirts and pants, and one professional pair of shoes. Your cousin's job requires them to be in business attire every day for work. Would you consider your cousin's desire to upgrade their wardrobe a need or a want? Explain why you feel as you do.

Business attire 20 days a month means they don't have enough clothes to dress well for work. They need to make a good impression at their first job -- cannot appear daily in unclean, worn out, or clothes that don't fit well. Shoes may wear out quickly if they have only one pair and wear them every single day.

Explain the importance of having a formal lease and reading it thoroughly before you sign.

Clearly states what payments are due, when, and to whom ● Clearly states consequences for missed payments ● Contains apartment's policies in writing, so there shouldn't be discrepancies about what is/is not allowed on the premises Makes it clear what services and/or utilities the owner is providing onsite

Identify two budgeting strategies that can help someone start or adjust their budget.

Depositing a portion of your paycheck directly into a savings account and being flexible are two budgeting strategies that could help someone start their budget.

What role do your needs and wants play when creating a budget?

Each person's needs and wants are different. Thus, determining your specific needs and wants is essential to creating a budget that will work for you.

Assume that your cousin decides they need a wardrobe update. What would you feel is an appropriate amount of business clothing for your cousin to own in order to succeed at their job?

Enough for 2 weeks, so they can wear everything only twice a month. 2-3 work appropriate pants/skirts and then a variety of shirts (10?) to go with them Shoes in black and brown.

You pay a security deposit before signing your lease agreement so you can secure your spot for the apartment.

False

What are a few ways that Alana can get a better understanding of her spending patterns?

Go back and review her bank and/or credit card statements and try to piece together where her money is going. This would be difficult to do if she was largely paying with cash. Track her spending over the next 30 days by collecting receipts with every purchase. Find a budgeting app that could track spending on her various accounts and provide analysis on where she is spending

Why is it important to "haggle" when negotiating to buy a car?

Good hagglers save themselves an average of 10-15% on the price of the car.

Identify one way in which setting a goal can help a person budget more effectively.

Having a goal allows a person to be motivated to budget more effectively. Having a goal for a trip to Hawaii, for example, will allow a person to think about the importance of budgeting

What are six reasons you need a budget

Helps you figure out your long term goals and work towards them It helps ensure you do not spend money you do not have It helps lead to a happier retirement Helps prepare you for emergencies Helps shed light on bad spending habits Helps you relax

Besides taxes, what are the three largest cost categories for families?

Housing, transportation, and food

What percentage of a typical family's expenses would you consider needs as compared to wants?

I would consider housing, transportation, food, and healthcare as needs. 31% + 15% + 12% + 8% = 66%

What would you need to know in order to tell if this person is actually wealthy?

In order to tell if the person is actually wealthy, you would need to calculate their assets minus their debt.

Your cousin has just graduated from college and is starting her search for an apartment to rent. What are three steps you think she should take during her search?

Liability protection Theft protection Fire protection

While it would be ideal to use all of the tips the article provides when budgeting, which 2-3 strategies do you think you will be able to realistically use?

Making sure to leave room in your budget for fun things and not going into debt for things that are not long-term investments are two strategies that we could realistically use. It would be easy to 'burn out' if you did not leave room for fun.

Suppose you have just graduated from college and are looking for a reliable used car, but nice car, which of the items under 'Assess your needs' would you care most about? (list a minimum of four). Are there any items not listed that matter to you?

Number of passengers Ice and snow driving compatibility Fuel economy All-wheel drive / four wheel drive / 2 wheel drive Safety Cargo capacity Will you be using children's car seats? Towing capability Size of car

What other costs of ownership do you need to factor in when thinking about your vehicle costs?

Other costs include taxes and fees, interest, and insurance, the price of the car, gas, and repairs. Also worth considering that every $ you put into your car is money that you cannot use to pay off any large debts you have (student loans, credit card bills, etc).

Identify two strategies you can use to save money on groceries.

Prepare a list and only buy those items Compare unit prices Shop quickly Be aware of and don't fall for supermarket tricks!

What should be your cousin's approach to purchasing their wardrobe updates?

Purchase a new piece or two from each paycheck, until they have enough. Buy coordinating pieces so they can mix-and-match to make multiple outfits. Buy high quality items that are on sale so they last. Buy inexpensive but attractive clothing now, and upgrade later when they have more income.

What are 3 things to consider when determining which city you want to live in?

Research listings online and in advertisements Check out the surrounding location Inspect possible apartments well

Why is important to use net pay instead of gross pay when budgeting?

Using net pay is important because unlike gross pay, net pay takes into account any deductions and therefore is more accurate to make a budget.

Why do you think people spend so much money on their wants despite the financial costs?

Wants are very impulsive and can seem like a better idea than they are in the short term. This is how impulse buys can hurt people financially.

What is one disadvantage of living with a roommate or housemate?

You must hold them accountable for making payments

What is the rule of thumb for how much you should spend on vehicle expenses per month?

Your total car expenses should be less than 20% of your total income after taxes.