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’m money you earn from a job. What am I?
ANSWER
Income
EXPLANATION
Because you get paid a paycheck.
At the grocery store, comparing the _____________ ____________ of similar items can help you find the best deal.
ANSWER
Unit Price
EXPLANATIONBecause this will show you how much money you are paying per item and if you are actually getting a good discount in the deal.
You’ve decided to rent an apartment. What are three housing costs you can expect to pay in addition to your rent?
1) Utilities (ie. water, trash, sewer)
2) Electrici
3) Intern
4) Renters insuran
5) Furnitu
6) Decorations
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, and does he currently meet that goal?
$10
Because he should save $10; he currently spends $25 and saves $25, so he is meeting it.
If Sarah earns $100 and spends $80, how much can she save?
$20
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 saving comes first before spending and you can spend all your money with zero-based budgeting, but that does not mean you saved any of your money.
I’m the opposite of a want. What am I?
ANSWER
Need
EXPLANATION
Because a budget has needs, wants, and savings.
A(n) ___________________________ can change month to month, but a(n) ___________________________ costs the same amount every month.
ANSWER
Variable expense and fixed expense
EXPLANATION
Because variable means to go up or down an fixed means to stay the same.What strategies can you use to save money while grocery shopping?
● Buy whole produce
● Make a shopping list so you don’t buy things you don’t need
● Compare unit prices of similar products
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 more does she need to cut from her expenses to reach her savings goal?
$100
Because she needs to save $100 total, currently saving $100 left after expenses, so she must cut $0 more — she already meets her goal. If she spent extra, she’d need to reduce spending accordingly.
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?
$50
Because $500 minus $200 rent, minus $150 food, and minus $100 transportation equals $50.
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
C) 25%
EXPLANATION
Because $2,000 minus $1,500 equals $500 and $500 divided by $2,000 equals 25%.
I’m the leftover money after paying all expenses. What am I?
ANSWER
Savings or disposable income
EXPLANATION
Because this is how much money you have after you pay your bills.
Creating a budget helps prevent overspending and ______ debt.
ANSWER
Reduce
EXPLANATION
Because you do not want fall into a large amount of debt.
What are the 3-4 benefits of understanding your spending patterns and making a budget?
1) You can make sure your spending aligns with your priorities
2) You can avoid going into debt
3) You can prepare for long-term goals
4) You can spend guilt-free
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?
Borrow $100
Use a credit card with $100 available balance
Delay repair until more funds saved
Another suggestion not mentioned.
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. How much must he save each month, and what percentage of his income would that savings be?
$200 AND 16.7%
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 rounded up.
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
I rise when interest rates increase and borrowing gets more expensive. What am I?
ANSWER
Loan payments
EXPLANATION
Because of the cost of borrowing goes up.
Generally, the minimum wage is _____________ _______________ the living wage across the U.S.
Lower Than
Jasmine has $2,000 in monthly income. She spends $1,000 on rent, $400 on food, $300 on transportation, and $200 on subscriptions. 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.
Pay down debt first, since the high interest rate costs more than she’d earn by saving.
If Chris earns $2,500/month and spends $2,000 on needs and wants, what percentage of his income is left for savings?
20%
If your rent is $900 and your monthly income is $3,000, what percent of your income goes to rent?
30%
Because $900 divided by $3,000 equals 0.3 decimal which is 30% when you move the decimal over two times to the right.
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.
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 rain day.Identify 2-3 fixed costs AND 2-3 variable costs of car ownership.
FIXED COSTS
1) Insurance
2) Monthly payment if you leased or nanced the vehicle
3) License and registration fees
Or another answer that is valid
VARIABLE COSTS
1) Gas
2) Maintenance costs
3) Tolls and tickets
Or another answer that is valid
$3,000 a month. His expenses are: $1,200 rent, $400 food, $200 transportation, $300 student loan, and $300 wants (entertainment/shopping). 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? If yes, how should he adjust his spending?
Yes because he has $600 left after expenses. To meet his emergency fund goal, he needs $500/month. Adding $100 extra for loans = $600. It is possible only if he eliminates wants spending completely or reduces it significantly.
Alex wants to buy a laptop for $1,200 in six months. How much must he save per month to reach his goal?
$200
Because
You make $2,400 a month. You save 15% of your income. How much money do you save?
$360
Because 15% multiplied by $2,400 equals $360.