Income & Paychecks
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. Which of the statements below is correct?
His gross pay is $2,500 and net pay is $3,000
His gross and net pay are $3,000
His gross and net pay are $2,500
His gross pay is $3,000 and net pay is $2,500
4. His gross pay is $3,000 and net pay is $2,500
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?
Danaisha, because she is focusing on her health, which will have a guaranteed payoff in the long run
Charles, because he's taking efforts to save money by focusing on his needs only
Both, because needs vs wants are determined on an individual basis
Neither, because they should meet in the middle somewhere. Charles should focus more on health, and Danaisha should cut her spending.
Both, because needs vs wants are determined on an individual basis
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?
There are several public transportation routes between Greg's apartment and work
The cost of public transportation is less than Greg’s monthly car payment
Greg’s company covers half the cost of his monthly public transportation pass
Using public transportation, Greg’s commute to work one-way is two hours
4. Using public transportation, Greg’s commute to work one-way is two hours
Which of these boxes of cereal has the LOWEST unit price?
Cereal A, which costs $3.20 for a 16 oz. box
Cereal B, which costs $5.00 for a 32 oz. box
Cereal C, which costs $2.50 for a 10 oz. box
Cereal D, which costs $4.50 for an 8 oz box
Cereal B: $5.00 ÷ 32 oz = $0.156 per oz
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:
A budget can help you identify any bad spending habits
Using a budget can allow you to work towards your financial goals
Having a budget can help you create an emergency fund
Having a budget is a requirement for obtaining a mortgage
Having a budget is a requirement for obtaining a mortgage
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?
6 months
1 year
2 years
3 years
2 years
20% of $40,000 = $8,000 saved per year
Emergency fund goal = $16,000
$16,000 ÷ $8,000 per year = 2 years
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?
Can I afford this laptop right now?
Is this the right time to buy this laptop or will it likely be on sale later?
What model laptop is trendy right now with people my age?
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?
What model laptop is trendy right now with people my age?
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?
Average rent for an apartment
Food and grocery store options in the area
Employment opportunities
Average cost of Uber, Lyft, or taxi fare
Average cost of Uber, Lyft, or taxi fare
One way the grocery store tricks you into spending more money than you budgeted for is...
Being open early in the morning and late at night
Paying their cashiers and baggers more
Putting high priced items at eye level and lower cost items above or below eye level
Accepting digital and print coupons
Putting high priced items at eye level and lower cost items above or below eye level
What action corresponds to the advice "Pay yourself first?"
Wait until the end of the month to determine how much you have leftover to save
Set aside a fraction of your paycheck into a savings account before you start spending
Spend your regular paycheck on needs and wants but funnel any extra money into saving
Become self-employed so you're paying yourself instead of being paid by an employer
Set aside a fraction of your paycheck into a savings account before you start spending
You are putting together your first post-graduation budget. Your net pay is $2,500 per month and you estimate that your monthly expenses will be $2,625. Which of the following is TRUE?
You have an extra $125 each month that you can spend on a fun or leisure activity
You can invest a portion of your monthly income into a retirement fund, as your expenses are well within your budget
You need to either cut back on your spending or find an additional source of income to balance your budget
You have room in your budget to make philanthropic donations to your favorite charity
You need to either cut back on your spending or find an additional source of income to balance your budget.
Which one of these expenses most likely represents a VARIABLE cost in someone's budget?
Electricity bill
Rent
Car insurance premium
Student loan payment
Electricity bill
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?
Groceries and eating out
Rent
Cell phone bill
Bedroom furniture
Rent
All of the following are good budgeting strategies if you want to save money at the grocery store EXCEPT:
Focusing on unit price when comparing similar products
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
Focusing only on the price when comparing similar products
Preparing a grocery list before you go to the store and avoiding buying items that aren’t on the list
Focusing only on the price when comparing similar products
Which description is most accurate for a Zero-Based Budget?
You put every dollar of your net pay into a budget category each month
You spend your checking account balance down to $0 every month
You spend your saving account balance down to $0 every month
You pay every one of your debts down to $0 every month
You put every dollar of your net pay into a budget category each month
Explain how setting a financial goal(s) can help you create a budget
Setting financial goals helps you create a budget by giving your money a clear purpose. When you know what you’re working toward, you can prioritize spending, set limits on non-essentials, and make better trade-offs. Goals also increase motivation and make it easier to track progress, turning a budget into a plan rather than just a list of expenses.
Which of the following best describes why the classification of a “need” versus a “want” can vary from person to person?
A. Needs are always required by law, while wants are optional
B. Needs and wants are determined solely by income level
C. Personal values, goals, and circumstances influence whether something is a need or a want
D. Wants are unnecessary expenses and should never be included in a budget
C. Personal values, goals, and circumstances influence whether something is a need or a want
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?
Yes, these are the three costs she should expect to pay once she is a car owner
No, she does not need to include the cost of auto insurance as it is included in her auto loan payment.
No, she needs to factor in other costs such as maintenance, emergency repairs, etc.
No, she does not need to include the cost of gas as it is covered under her auto insurance policy
3. No, she needs to factor in other costs such as maintenance, emergency repairs, etc.
How can unit pricing help you save money on groceries? Describe one challenge you may face when calculating the unit price of an item in the store.
Unit pricing helps you save money by allowing you to compare the cost per unit (such as per ounce or per pound) of similar products, so you can choose the option that gives you the most value for your money—even if the total price is higher.
One challenge when calculating unit price in the store is that products may use different units or package sizes, which can make comparisons confusing or time-consuming, especially if the unit price isn’t clearly listed on the shelf tag.
Which of the following accurately describes the envelope budgeting strategy?
Putting cash for different spending categories into separate envelopes and only spending what's in each envelope
Regularly buying investments like stocks or bonds with a certain amount of money each month
Saving a small part of your income every week to buy something big at the end of the year
Keeping a written record of all of the money you receive and spend in a notebook to see where your money goes
Putting cash for different spending categories into separate envelopes and only spending what's in each envelope
What role does a budget play in managing your personal finances? What steps can you take over time to make sure that your budget works for you?
A budget plays a key role in managing personal finances by helping you track income and expenses, make intentional spending decisions, and avoid overspending or debt. It ensures your money is being used to cover needs, support goals, and prepare for future expenses instead of being spent randomly.
To make sure your budget works over time, regularly track your spending, compare it to your plan, and adjust categories as your income or expenses change. Set realistic goals, review your budget monthly, and make small changes—such as cutting unnecessary costs or increasing savings—as your financial situation improves.
Identify one advantage and one disadvantage of using a budgeting app to create and stick to a budget.
Advantage:
A budgeting app makes it easier to track spending in real time and see where your money is going, which can help you stay organized and accountable.
Disadvantage:
Budgeting apps may require sharing financial information or linking accounts, which can raise privacy concerns or feel uncomfortable for some users.
Which of the following is TRUE about a lease agreement?
A lease is an agreement between you and your roommates that you submit to the apartment owner.
You never have to pay any fees when you sign a lease. If you do, that means it is a scam.
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
A lease is an agreement that includes details about rent, apartment policies, vacating, etc.
4. A lease is an agreement that includes details about rent, apartment policies, vacating, etc.
Which statement accurately describes how the 50/20/30 Rule would break down your take-home pay?
50% on wants, 20% on saving, and 30% on needs
50% on saving, 20% on needs, and 30% on wants
50% on needs, 20% on saving, and 30% on wants
50% on saving, 20% on wants, and 30% on needs
50% on needs, 20% on saving, and 30% on wants
For two months in a row, Aaron realizes he has gone over budget by roughly $175. Which of these options makes the most sense for him to fix his problem?
Cancel one of his streaming video subscriptions and go out to dinner three fewer times each month with friends
Start paying just the minimum monthly payment on his student loan and credit card debt, instead of the extra he's been contributing
Contribute $100 less to savings each month and $75 less to his retirement fund
Sell his current car and get a less expensive vehicle
Cancel one of his streaming video subscriptions and go out to dinner three fewer times each month with friends