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