How to create a budget and stick to it
  • 1. What is the first step in creating a budget?
A) Cut all unnecessary spending.
B) Track your income and expenses.
C) Invest in the stock market.
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) Mortgage
B) Utilities
C) Loan Payment
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% debt, 30% income, 20% expenses.
B) 50% savings, 30% needs, 20% wants.
C) 50% needs, 30% wants, 20% savings/debt repayment.
D) 50% investments, 30% bills, 20% fun.
  • 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) Reverse Budgeting
C) Zero-Based Budgeting
D) 50/30/20 Rule
  • 8. What is an emergency fund used for?
A) Going on vacation.
B) Buying luxury items.
C) Investing in high-risk stocks.
D) Unexpected expenses like car repairs or medical bills.
  • 9. What is the envelope system?
A) Mailing bills in colorful envelopes.
B) Using cash-filled envelopes for specific spending categories.
C) Sending money anonymously.
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 avoid paying taxes.
B) To have a clear direction for your money.
C) To make your friends jealous.
D) To impress your boss.
  • 13. What is debt snowball?
A) Paying off smallest debt first for motivation.
B) Accumulating more debt.
C) Ignoring your debts.
D) Filing for bankruptcy.
  • 14. What is debt avalanche?
A) Paying off the debt with the lowest interest rate first.
B) Paying off all your debts at once.
C) Paying off the debt with the highest 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 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) Average Purchase Return
B) Approved Payment Request
C) Annual Percentage Rate
D) Annual Prime Rate
  • 17. What is compounding interest?
A) Losing money on your investments.
B) A type of savings account.
C) Earning interest on your initial investment and accumulated interest.
D) Paying interest on your debt.
  • 18. What is diversification in investing?
A) Spreading your investments across different assets.
B) Betting on a single outcome.
C) Investing all your money in one stock.
D) Avoiding investments altogether.
  • 19. What is a credit score?
A) A number that reflects your creditworthiness.
B) Your bank account balance.
C) The amount of money you have saved.
D) Your annual income.
  • 20. Why is it important to have a good credit score?
A) To get better interest rates on loans and credit cards.
B) To get free money from the government.
C) To impress your friends.
D) To avoid paying taxes.
  • 21. What is a 'sinking fund'?
A) A fund for burying your money.
B) A government bailout program.
C) Saving money for a specific, larger purchase.
D) A loan with extremely high interest rates.
  • 22. Which is better: saving $100 or spending $100 on lottery tickets?
A) Saving $100
B) They are the same
C) Impossible to say
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) Earning valuable rewards points.
D) Avoiding the need to track spending.
  • 24. If your expenses exceed your income, what should you do first?
A) Ignore the problem and hope it goes away.
B) Take out a high-interest loan.
C) Blame someone else for your financial situation.
D) Identify and cut unnecessary spending.
  • 25. What is an opportunity cost?
A) The cost of doing business.
B) The cost of running a company.
C) A sudden, unexpected expense.
D) The value of the next best alternative foregone when making a decision.
  • 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 new car
B) Designer clothes
C) A luxury vacation
D) Food
  • 28. What does 'budget surplus' mean?
A) You have no money at all.
B) You are in debt.
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 decreases the cost of goods and services.
C) It makes you richer.
D) It has no impact on your budget.
  • 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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