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