Multiple Choice (MC)
Which budgeting method is based on splitting income into categories like 50% needs, 30% wants, and 20% savings?
A) Zero-based budgeting
B) Cash envelope system
C) 50/30/20 rule
D) Pay-yourself-first method
ANSWER
C) 50/30/20 rule
EXPLANATION
Because 50%/30%/20% is the same thing as 50/30/20.
I am the money you earn from a job. What am I?
ANSWER
Income
EXPLANATION
Because you get paid a paycheck.
QUESTION
At the grocery store, comparing the _____________ ____________ of similar items can help you find the best deal.
ANSWER
Unit Price
EXPLANATION
Because this will show you how much money you are paying per item and if you are actually getting a good discount in the deal.
QUESTION
You’ve decided to rent an apartment. What are three housing costs you can expect to pay in addition to your rent?
ANSWER
Utilities (ie. water, trash, sewer)
Electricity
Intern
Renters insurance
Furniture
Decorations
QUESTION
Jordan makes $50 a week from allowance. He spends $15 on snacks and $10 on video games. If he wants to save 20% of his weekly allowance, how much should he save?
ANSWER
$10
EXPLANATION
Because 20% multiplied by $50 equals $10
QUESTION
If Sarah earns $100 and spends $80, how much can she save?
ANSWER
$20
EXPLANATION
Because $100 subtracted by $80 equals $20.
You earn $1,000 a month. If you spend $400 on needs, $300 on wants, and save $300, which budgeting method are you following?
A) Zero-based budgeting
B) 50/30/20 rule
C) Pay yourself first
D) Envelope system
ANSWER
C) Pay Yourself First
EXPLANATION
Because you can spend all your money with zero based budgeting, but that does not mean you saved any of your money.
QUESTION
I am the opposite of a want. What am I?
ANSWER
Need
EXPLANATION
Because a budget has needs, wants, and savings.
QUESTION
A ____________ _______________ can change month to month, but a ________________ ___________ costs the same amount every month.
ANSWER
Variable expense and fixed expense
EXPLANATION
Because variable means to go up or down a fixed means to stay the same.
QUESTION
What strategies can you use to save money while grocery shopping?
ANSWER
Buy whole produce
Make a shopping list so you don’t buy things you don’t need
Compare unit prices of similar products
Listening to music
QUESTION
Tasha earns $400 each month from a part-time job. She spends $120 on transportation, $100 on food, and $80 on clothes. If her goal is to save 25% of her income, how much does she need to reach her savings goal?
ANSWER
$100
EXPLANATION
Because 25% multiplied by $400 equals $100
QUESTION
Jamal has a monthly budget of $500. He spends $200 on rent, $150 on food, and $100 on transportation. How much does he have left?
ANSWER
$50
EXPLANATION
Because $500 minus $200 rent, minus $150 food, and minus $100 transportation equals $50.
QUESTION
If you make $2,000 a month and spend $1,500, how much is your savings rate?
A) 10%
B) 15%
C) 20%
D) 25%
ANSWER
D) 25%
EXPLANATION
Because $2,000 minus $1,500 equals $500 and $500 divided by $2,000 equals 25%.
QUESTION
I am the leftover money after paying all expenses. What am I?
ANSWER
Savings
EXPLANATION
Because this is how much disposable income you have after you pay your bills.
QUESTION
Creating a budget helps prevent overspending and ______ debt.
ANSWER
Reduce
EXPLANATION
Because you do not want to fall into a large amount of debt.
QUESTION
What are the 3-4 benefits of understanding your spending patterns and making a budget?
ANSWER
You can make sure your spending aligns with your priorities
You can avoid going into debt
You can prepare for long-term goals
You can spend guilt-free
QUESTION
Maria’s car breaks down and the repair costs $600. She has $500 in her emergency fund. What are two possible options she has to cover the full repair?
ANSWER
Borrow $100
Use a credit card with $100 available balance
Delay repair until more funds saved
EXPLANATION
Because she has to figure out how to pay the total repair costs.
QUESTION
Malik earns $1,200 a month. He has $600 in rent, $200 in groceries, $100 in phone/wifi, and $100 in transportation. He wants to start an emergency fund with $1,000 in the next 5 months. What percentage of his income would that savings be?
ANSWER
16.7%
EXPLANATION
Because $1,000 divided by 5 equals $200 per month and $200 monthly savings divided by the $1,200 income per month equals 0.166 decimal which is 16.7% when you move the decimal over two times to the right and round up.
QUESTION
A good financial rule is that housing should not exceed 30% of income. If someone earns $3,600 a month, which rent payment would be the highest they should take on while still following this rule?
A) $900
B) $1,080
C) $1,200
D) $1,300
ANSWER
B) $1,080
EXPLANATION
Because 0.30 multiplied by $3,600 equals $1,080
QUESTION
I rise when interest rates increase and borrowing gets more expensive. What am I?
ANSWER
Loan payments
EXPLANATION
Because the cost of borrowing goes up.
QUESTION
Generally, the minimum wage is _____________ _______________ the living wage across the U.S.
ANSWER
Less Than
EXPLANATION
Because minimum wage is a law set by the government that must be paid and a living wage is the local costs for necessities.
QUESTION
Jasmine has $2,000 in monthly income. She also has $2,000 in credit card debt with a 20% interest rate. She has $100 left over each month. Should she save that $100 in an emergency fund or use it to pay down debt first? Explain why.
ANSWER
Pay down debt first because the high interest rate costs more than she will earn by saving.
QUESTION
If Chris earns $2,500/month and spends $2,000 on needs and wants, what percentage of his income is left for his savings?
ANSWER
20%
EXPLANATION
Because $500 divided by $2,500 equals 20%
QUESTION
If your rent is $900 and your monthly income is $3,000, what percent of your income goes to rent?
ANSWER
30%
EXPLANATION
Because $900 divided by $3,000 equals 0.3 decimal which is 30% when you move the decimal over two times to the right.
QUESTION
Maria earns $2,400/month. She spends $1,000 on rent, $500 on food, and $300 on transportation. She has $600 left. Which is the best financial decision?
A) Spend it all on entertainment and clothes
B) Put it all into savings
C) Split between savings and paying off debt
D) Loan it to a friend
ANSWER
C) Split between savings and paying off debt
EXPLANATION
Because you don’t want to allow the interest on the debt to increase, which means you are spending more money over time.
QUESTION
I measure how well you can cover unexpected expenses without debt. What am I?
ANSWER
Emergency Fund
EXPLANATION
Because you are supposed to have at least three to six months saved to the side for a rainy day.
QUESTION
Identify 2-3 fixed costs AND 2-3 variable costs of car ownership.
ANSWER
FIXED COSTS
Insurance, Car Note (Monthly payment) if you leased or advanced the vehicle, License and registration fees
VARIABLE COSTS
Gas, Maintenance costs, and Tolls and tickets
QUESTION
$3,000 a month. His expenses are $2,400. He wants to build a $6,000 emergency fund in 12 months and pay an extra $100 per month toward his student loans. Is this possible with his budget?
ANSWER
Yes because he has $600 left after expenses. He needs $500 per month to meet his emergency fund goal.
QUESTION
Alex wants to buy a laptop for $1,200 in six months. How much must he save per month to reach his goal?
ANSWER
$200
EXPLANATION
Because $1,200 divided by 6 months equals $200.
QUESTION
You make $2,400 a month. You save 15% of your income. How much money do you save?
ANSWER
$360
EXPLANATION
Because 15% multiplied by $2,400 equals $360.