#1
Which of the following is a basic step in personal budgeting?
Spend without tracking expenses
Set financial goals
Avoid saving money
Ignore income sources
#2
What is the primary purpose of creating a personal budget?
To limit spending
To track income and expenses
To increase debt
To eliminate savings
#3
What is the purpose of an emergency fund in personal finance?
To cover unexpected expenses
To splurge on luxury items
To invest in high-risk ventures
To finance regular expenses
#4
What does 'paying yourself first' mean in the context of personal finance?
Paying your bills on time
Prioritizing saving or investing money before paying other expenses
Using credit cards for all purchases
Spending all your income on wants
#5
What is the purpose of a sinking fund in personal finance?
To fund a lavish vacation
To cover regular monthly expenses
To save for a specific future expense
To pay off debts immediately
#6
What is the primary advantage of using cash envelopes for budgeting?
Easier to overspend
Better tracking of expenses
Increased risk of theft
Limited control over spending
#7
Which of the following is an example of a fixed expense?
Grocery bills
Entertainment expenses
Utility bills
Dining out
#8
What does the '50/30/20 rule' in personal finance generally suggest?
Allocating 50% of income to savings
Spending 50% of income on needs, 30% on wants, and 20% on savings
Allocating 30% of income to savings
Spending 50% of income on wants, 30% on needs, and 20% on savings
#9
What is the purpose of tracking expenses in personal budgeting?
To increase debt
To ignore financial health
To identify spending patterns
To reduce income
#10
Which of the following is an example of a variable expense?
Rent or mortgage
Car insurance
Health insurance premiums
Entertainment costs
#11
What is the purpose of a budget variance analysis?
To ignore budget discrepancies
To identify areas where actual spending differs from budgeted amounts
To discourage budgeting
To encourage overspending
#12
What is 'snowball method' in personal finance?
A method to increase debt
A method to reduce debt by paying off smallest debts first
A method to ignore debts completely
A method to invest in high-risk ventures
#13
What is 'zero-based budgeting'?
Budgeting with no savings
Allocating every dollar of income to a specific expense or savings category
Budgeting with no spending limits
Not budgeting at all
#14
What is the concept of 'opportunity cost' in personal finance?
The cost of borrowing money
The cost of missing out on the next best alternative when a decision is made
The cost of living in a certain area
The cost of unexpected expenses
#15
What is the purpose of a financial audit in personal budgeting?
To maximize spending
To minimize income
To ensure financial accuracy and accountability
To avoid saving money
#16
What does 'debt-to-income ratio' measure in personal finance?
The ratio of debt payments to total income
The ratio of assets to liabilities
The ratio of income to expenses
The ratio of savings to spending
#17
What is the concept of 'time value of money' in personal finance?
The principle of saving money over time
The principle that money available today is worth more than the same amount in the future
The principle of borrowing money
The principle of spending money