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