Budgeting

Budgeting 101

100

Isaiah has a summer internship at a technology company and is paid $3,000. After Federal and state taxes, Social Security, and Medicare are deducted, his take-home pay is $2,500.  Answer the following: Gross pay is ?   Net pay is  ?

His gross pay is $3,000 and net pay is $2,500

200

Which one of these expenses most likely represents a VARIABLE cost in someone's budget?

1. Electricity bill
2. Rent
3. Car insurance premium
4. Student loan payment

300

You overhear your cousin talking about the importance of creating and sticking to a budget. All of the following are good reasons to create and stick to a budget EXCEPT:

1. A budget can help you identify any bad spending habits
2. Using a budget can allow you to work towards your financial goals
3. Having a budget can help you create an emergency fund
4. Having a budget is a requirement for obtaining a mortgage

400

Now that Sanjana is done with college, she is trying to decide whether or not she should buy a new laptop for herself. She has made a preliminary list of questions she can ask herself to determine if the new laptop is a need or a want. Which of the following questions would you ELIMINATE from this list?

1. Can I afford this laptop right now?
2. Is this the right time to buy this laptop or will it likely be on sale later?
3. What model laptop is trendy right now with people my age?
4. How am I going to pay for this laptop? If I have to charge it or take out a loan, can I afford the monthly payments?

500

Explain how setting a financial goal(s) can help you create a budget.

Creating financial goals helps you determine your priorities, needs, and wants. This allows you to better proportion your available funds and create a more focused budget that is tailored towards your goals.

Budgeting Strategies

100

You earn a salary of $40,000 per year and decide to save 20% of your gross pay. You set a goal of creating  a $16,000 emergency fund. How long will it take for you to achieve your goal?

2 years

200

All of the following are good budgeting strategies if you want to save money at the grocery store EXCEPT:

1. Focusing on unit price when comparing similar products
2. Building a weekly meal plan around items you already own or items that are on sale that week, rather than just choosing foods you'd like to eat
3. Focusing only on the price when comparing similar products
4. Preparing a grocery list before you go to the store and avoiding buying items that aren’t on the list

300

Which description is most accurate for a Zero-Based Budget?

You put every dollar of your net pay into a budget category each month

400

What action corresponds to the advice "Pay yourself first?"

Set aside a fraction of your paycheck into a savings account before you start spending

500

Which of the following accurately describes the envelope budgeting strategy?

1. Putting cash for different spending categories into separate envelopes and only spending what's in each envelope
2. Regularly buying investments like stocks or bonds with a certain amount of money each month
3. Saving a small part of your income every week to buy something big at the end of the year
4. Keeping a written record of all of the money you receive and spend in a notebook to see where your money goes

Budgeting for Your Home

100

Leila just graduated from college and is comparing a few different cities to move to. Which of these factors is the LEAST important thing for her to consider right now?

1. Average rent for an apartment
2. Food and grocery store options in the area
3. Employment opportunities
4. Average cost of Uber, Lyft, or taxi fare

200

You are interested in renting an apartment after graduating college. You meet with the landlord and complete the application. All of the following may need to be provided when you sign your lease EXCEPT

1. Proof of employment
2. A bank account
3. First and last month's rent
4. A security deposit

300

You're considering moving into a 3 bedroom apartment with 2 roommates, rather than living on your own post-college. Which of your expenses would likely decrease by having roommates?

Rent

400

Which of the following is TRUE about a lease agreement?

1. A lease is an agreement between you and your roommates that you submit to the apartment owner.
2. You never have to pay any fees when you sign a lease. If you do, that means it is a scam.
3. A lease often has information about your prior housing experience; it's a record that the apartment owner can use to see if you are a good candidate
4. A lease is an agreement that includes details about rent, apartment policies, vacating, etc.

500

A good rule of thumb when budgeting for a home is to expect to make a _______ down payment.

20%

Budgeting for Transportation

100

Which of these costs would be the MOST difficult to adjust if you were looking to reduce your expenses?

1. Dining out at local restaurants
2. Loan payment on a new car
3. Expenses for new clothes
4. Postponing a purchase for a big-screen TV

200

Greg is trying to decide whether he needs a car when he moves to the city. Which of the following would be a reason for Greg to get a car rather than use public transportation?

1. There are several public transportation routes between Greg's apartment and work
2. The cost of public transportation is less than Greg’s monthly car payment
3. Greg’s company covers half the cost of his monthly public transportation pass
4. Using public transportation, Greg’s commute to work one-way is two hours

300

When living in a rural area, you are most likely to…

Depend mostly on personal vehicles, such as cars or motorcycles, for transportation

400

Janine is considering what auto costs she is going to have after buying a new car. She has budgeted enough money for the monthly auto loan payment, gas, and auto insurance. Has Janine factored in all of the costs associated with car ownership?

No, she needs to factor in other costs such as maintenance, emergency repairs, etc.

500

On transportation: “I’ve had a few people tell me that there is plenty of public transportation in Boston, but I’ve always had a car and want my own in Boston too so that I can have more flexibility.”

What advice would you give this person?

She should evaluate the amount of use she will get out of her car. If she ends up using public transportation most of the time, it would not make sense for her to pay for insurance, depreciation, parking, and other costs that come with owning a car. It would likely be more affordable to bike, use public transport, and use a ridesharing service.

Budgeting for Food

100

If you are trying to substantially reduce the amount you spend on food, you should try...

Cooking your own food at home for as many meals as possible

200

Which of these boxes of cereal has the LOWEST unit price?

1. Cereal A, which costs $3.20 for a 16 oz. box
2. Cereal B, which costs $5.00 for a 32 oz. box
3. Cereal C, which costs $2.50 for a 10 oz. box
4. Cereal D, which costs $4.50 for an 8 oz box

300

All of the following are good budgeting strategies if you want to save money at the grocery store EXCEPT:

1. Focusing on unit price when comparing similar products
2. Building a weekly meal plan around items you already own or items that are on sale that week, rather than just choosing foods you'd like to eat
3. Focusing only on the price when comparing similar products
4. Preparing a grocery list before you go to the store and avoiding buying items that aren’t on the list

400

Danaisha does all her grocery shopping at organic markets and has a monthly grocery bill of $325. Charles says that Danaisha is wasting her money on wants instead of focusing on needs. He buys in bulk, uses coupons, and shops at Save-More for a monthly bill of $195. Who's budgeting correctly for food?

Both, because needs vs wants are determined on an individual basis

500

One way the grocery store tricks you into spending more money than you budgeted for is...

Putting high priced items at eye level and lower cost items above or below eye level