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