Personal Finance: Chapter 2

What's a zero-based budget, and why is it important?

A zero based budget is when your income - your expenses = 0. It is important because it assures every dollar you earn is accounted for.

What are 2 of the four walls? A. Food and Utilities B. Cell phone and transportation C. Food and Insurance D. College fund and money for the movies

A. Food and Utilities

What's your biggest wealth building tool? A. Income B. Investments C. Savings Account D. Inheritance

A. Income

How many months does it take for your budget to start working as a budget should? A. Three B. Four C. Five D. One

A. Three

What is it called when you make money on the percentage of total sales you make? A. Irregular Income B. Commission C. Gross Income D. Overtime

B. Commission

When you are creating a monthly budget, what's the first priority under "expenses"? A. Saving B. Giving C. Spending D. Entertainment

B. Giving

How many categories should you have in your budget? A. 15 or more B. No limit C. No more than 10 D. At least 3

B. No limit

Your money personality can affect your _____. A. Personal Values B. Attitude toward budgeting C. Choice of bank D. Ability to budget

B. attitude toward budgeting

What is an example of an intermittent expense?

Buying a yearbook

Which of the following is NOT a component of a budget? A. Saving B. Income C. Credit score D. Giving

C. Credit score

Going to the movies is a what types of expenses? A. Intermittent and variable B. Discretionary and fixed C. Discretionary and variable D. Intermittent and fixed

C. Discretionary and variable

What does a budget show you? A. How much you need to save B. How much money you need to earn C. How much money you plan to come in and go out during the month D. How much money you spent the last month

C. How much money you plan to come in and go out during the month

If you approach money with a generous spirit, you'll be... A. Able to save B. Less content C. More grateful D. Free of stress

C. More Grateful

What will tracking your expenses help you do? A. Stick to a budget B. Catch errors C. Make Adjustments D. All of these

D. All of these

Which of the following is not a type of discretionary expense? A. Fixed B. Intermittent C. Variable D. Depreciation

D. Depreciation

A common misconception is that budgeting will keep you from having fun, when in reality a budget... A. Adds more stress to your life B. Means there are no rules C. Restricts your fun completely D. Gives you permission to spend

D. Gives you permission to spend

How often should you budget? A. Daily B. Weekly C. Annually D. Monthly

D. Monthly

A(n) _______needs to be evaluated in light of your other expenses for the month.

Discretionary expense

What is an example of a discretionary expese?

Eating out

True or False- If you get married, only one person is responsible for budgeting

False

True or False- If you have an irregular income, budgeting won't work for you

False

True or False- Net income is the amount you get paid before taxes

False

True or False- Online budgeting apps are more effective than budgeting with a pen and paper

False

True or False- Your monthly rent is an example of a variable expense

False

True or False- Detailed categories will help you make better spending decisions

True

The cost of groceries and gas is considered a(n) ____.

Variable expense.

What is a discretionary (non-essential) expense?

expense for things you don't need

What is an intermittent expense?

expense that occurs at various times throughout the year and tends to be in large, lump sums

What is a variable expense?

expense that varies in dollar amount from month to month, but that you can expect to have every month

What are the four walls?

food, utilities, shelter, and transportation

The three priorities in your budget after listing income, are...

giving, saving and spending.

What is an example of a variable expense?

groceries

The envelope system is especially helpful for expenses like...

groceries, clothes and entertainment.

Specific categories are important to consider when creating a budget so you can...

know exactly what you are spending on.

Commission is when you make money based on the percentage of _____.

Total sales

Although the majority of Americans think budgeting is important about____ of Americans actually use a budget.

35%

A(n)_______ stays the same from month to month.

Fixed expense

A budget doesnt tell you not to spend. A budget actually...

Gives you freedom to spend.

The first priority in you budget should be

Giving

To budget with a(n)_____, prioritize expenses from most to least important so your most important expenses are covered first.

Irregular income.

Taxes and withholding impact your _______, which is the amount of money you take home on your paycheck.

Net income.

What is an example of a fixed expense?

Rent

The best way to budget is

The best way that works for you

A(n)______ should account for fixed, variable, intermittent, and discretionary expenses based on income.

Zero-based budget

What is a fixed expense?

an expense that stays the same each month