How to create a budget and stick to it
  • 1. What is the first step in creating a budget?
A) Invest in the stock market.
B) Track your income and expenses.
C) Open a separate savings account.
D) Cut all unnecessary spending.
  • 2. Which of these is a fixed expense?
A) Entertainment
B) Gas
C) Rent
D) Groceries
  • 3. Which of these is a variable expense?
A) Mortgage
B) Loan Payment
C) Utilities
D) Insurance
  • 4. What is the purpose of a budget?
A) To track income, expenses, and financial goals.
B) To avoid paying taxes.
C) To impress your friends.
D) To become instantly rich.
  • 5. What is the 50/30/20 rule?
A) 50% needs, 30% wants, 20% savings/debt repayment.
B) 50% investments, 30% bills, 20% fun.
C) 50% debt, 30% income, 20% expenses.
D) 50% savings, 30% needs, 20% wants.
  • 6. What does 'pay yourself first' mean?
A) Give all your money to charity.
B) Prioritize saving a portion of your income before spending.
C) Spend all your money on yourself.
D) Borrow money to buy things you want.
  • 7. Which budgeting method involves assigning every dollar a job?
A) Envelope System
B) 50/30/20 Rule
C) Reverse Budgeting
D) Zero-Based Budgeting
  • 8. What is an emergency fund used for?
A) Investing in high-risk stocks.
B) Unexpected expenses like car repairs or medical bills.
C) Buying luxury items.
D) Going on vacation.
  • 9. What is the envelope system?
A) Sending money anonymously.
B) Storing important documents in envelopes.
C) Using cash-filled envelopes for specific spending categories.
D) Mailing bills in colorful envelopes.
  • 10. What does 'cutting expenses' involve?
A) Reducing unnecessary spending.
B) Borrowing money from friends.
C) Ignoring your bills.
D) Quitting your job.
  • 11. Which of the following is a budgeting app?
A) Instagram
B) Facebook
C) Mint
D) Twitter
  • 12. What is the purpose of setting financial goals?
A) To make your friends jealous.
B) To have a clear direction for your money.
C) To impress your boss.
D) To avoid paying taxes.
  • 13. What is debt snowball?
A) Ignoring your debts.
B) Filing for bankruptcy.
C) Accumulating more debt.
D) Paying off smallest debt first for motivation.
  • 14. What is debt avalanche?
A) Paying off the debt with the largest balance first.
B) Paying off the debt with the lowest interest rate first.
C) Paying off all your debts at once.
D) Paying off the debt with the highest interest rate first.
  • 15. Why is it important to review your budget regularly?
A) To impress your friends.
B) To make adjustments based on your changing needs.
C) To avoid thinking about your finances.
D) To make sure you are spending enough money.
  • 16. What does APR stand for?
A) Approved Payment Request
B) Annual Percentage Rate
C) Annual Prime Rate
D) Average Purchase Return
  • 17. What is compounding interest?
A) A type of savings account.
B) Paying interest on your debt.
C) Losing money on your investments.
D) Earning interest on your initial investment and accumulated interest.
  • 18. What is diversification in investing?
A) Betting on a single outcome.
B) Avoiding investments altogether.
C) Spreading your investments across different assets.
D) Investing all your money in one stock.
  • 19. What is a credit score?
A) A number that reflects your creditworthiness.
B) Your annual income.
C) The amount of money you have saved.
D) Your bank account balance.
  • 20. Why is it important to have a good credit score?
A) To get free money from the government.
B) To impress your friends.
C) To get better interest rates on loans and credit cards.
D) To avoid paying taxes.
  • 21. What is a 'sinking fund'?
A) A government bailout program.
B) Saving money for a specific, larger purchase.
C) A fund for burying your money.
D) A loan with extremely high interest rates.
  • 22. Which is better: saving $100 or spending $100 on lottery tickets?
A) Spending $100 on lottery tickets
B) They are the same
C) Saving $100
D) Impossible to say
  • 23. What is the danger of relying on credit cards for everyday expenses?
A) Accumulating debt and paying high interest.
B) Improving your credit score quickly.
C) Avoiding the need to track spending.
D) Earning valuable rewards points.
  • 24. If your expenses exceed your income, what should you do first?
A) Blame someone else for your financial situation.
B) Take out a high-interest loan.
C) Identify and cut unnecessary spending.
D) Ignore the problem and hope it goes away.
  • 25. What is an opportunity cost?
A) A sudden, unexpected expense.
B) The cost of running a company.
C) The value of the next best alternative foregone when making a decision.
D) The cost of doing business.
  • 26. What is the difference between 'needs' and 'wants'?
A) Needs make you happy, wants make you sad.
B) Needs are expensive, wants are cheap.
C) There is no real difference.
D) Needs are essential for survival, wants are not.
  • 27. Which is an example of a 'need'?
A) A luxury vacation
B) Designer clothes
C) A new car
D) Food
  • 28. What does 'budget surplus' mean?
A) You have more income than expenses.
B) You are in debt.
C) You have no money at all.
D) You have more expenses than income.
  • 29. How does inflation impact your budget?
A) It decreases the cost of goods and services.
B) It makes you richer.
C) It has no impact on your budget.
D) It increases the cost of goods and services.
  • 30. What does 'net worth' mean?
A) The amount of money in your bank account.
B) The value of your assets minus your liabilities.
C) Your annual salary.
D) Your credit score.
Created with That Quiz — where test making and test taking are made easy for math and other subject areas.