Download Name: Date: Understanding Personal Finances 1. Budgeting is

Name: ________________________________
Date: __________________
Understanding Personal Finances
1. Budgeting is crucial to your financial success.
a. True
b. False
2. You should save money for three basic
reasons: emergency fund, purchases and wealth
building.
a. True
b. False
3. Being aware of your money personality will
not help you create a money plan.
a. True
b. False
4. ʺPay yourself firstʺ means you should assign a
portion of your income to saving and investing
every month.
a. True
b. False
5. A cash flow plan that assigns an expense to
every dollar of your income, wherein the total
income minus the total expenses equals zero.
a. zero-based budget
b. zero-based checking
c. zero-based living
d. zero-spending plan
6. Your monthly budget should include:
a. Variable expenses
b. Discretionary expenses
c. Fixed expenses
d. All of the above
7. Non-essential expenses
a. Discretionary
b. Fixed
c. Intermittent
d. Variable
8. Expenses that remain the same each month
a. Discretionary
b. Fixed
c. Intermittent
d. Variable
9. Groceries are a:
a. Fixed expense
b. Variable expense
c. Discretionary expense
d. Intermittent expense
10. Rent is a:
a. Fixed expense
b. Variable expense
c. Discretionary expense
d. Intermittent expense
11. Car repairs are a:
a. Fixed expense
b. Variable expense
c. Discretionary expense
d. Intermittent expense
12. Eating out is a:
a. Fixed expense
b. Variable expense
c. Discretionary expense
d. Intermittent expense
13. Which of the following statements is false?
a. A cash flow statement summarizes all of
the income and outgo (spending) over a
certain time period.
b. A budget is a written plan for saving and
spending.
c. A budget is meant to summarize the
saving and spending that has taken place
over the past year.
d. The cash flow statement is reflective of
what has already taken place.
14. Key components of financial planning
include all of the following except:
a. Write out a detailed plan for
accomplishing your goals
b. Replace money myths with money truths
c. Allow your financial planner to make all
of your major money decisions
d. Regularly monitor and reassess your
financial plan
15. Why is having a fully funded emergency fund
so important when it comes to your financial
well-being?
a. As long as you have a good-paying job,
you really donʹt need an emergency
fund.
b. The purpose of an emergency fund is to
set money aside for unexpected financial
emergencies and to provide a sense of
financial security.
c. The purpose of an emergency fund is to
have money set aside for large
purchases, like vacations.
d. None of the above
16. Which of the following statements best
explains why income alone does not determine
wealth?
a. Investing is the only factor that
contributes to wealth building.
b. Income alone does determine a personʹs
wealth.
c. Only people who are natural savers can
become wealthy.
d. How much money a person makes does
not dictate his or her spending and
saving behavior.
17. Which of the following is a consequence of
spending more than you make?
a. Missed opportunity to save and invest
b. Stress
c. A cycle of debt
d. All of the above
18. Personal financial success is primarily the
result of:
a. Managing your money behavior
b. Winning the lottery
c. Generous welfare and unemployment
programs
d. Inheriting money from your parents
19. Which of the following is not a benefit of
understanding your own money personality?
a. Recognizing who you are allows you the
opportunity to grow and learn.
b. Once you know your money personality,
you can develop a financial plan that
works for you.
c. Knowing your money personality allows
you to excuse excessive spending
because it is simply part of your nature.
d. None of the above.
20. Which of the following best explains why
students should learn about personal finance?
a. Learning to manage money at this stage
can eliminate financial mistakes and
promote huge financial benefits for the
future.
b. Personal finance skills are better learned
through trial and error.
c. Personal finance skills are highly complex
and require a great deal of time to learn.
d. Learning to manage money will help you
achieve a profitable career.