Budgeting

Section Quiz

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A budget is important because it will help you:

a. categorize expenses
b. set spending limits
c. creating a financial plan
d. all of the above

According to the chapter, what method is recommended to identify overspending?

a. tracking expenses
b. set spending limits
c. create a financial plan
d. none of the above

Expenses such as car repairs or medical expenses are considered:

a. periodic expenses
b. fixed expenses
c. variable expenses
d. irregular expenses

According to recommended spending guidelines, a proper debt-to- income ratio should not be higher than:

a. 15 percent
b. 22 precent
c. 30 percent
d. 36 percent

What percentage of income should be allocated towards debt, according to recommended spending guidelines?

a. 10 percent
b. 15 percent
c. 20 percent
d. 25 percent

In evaluating your spending, which of the following expenses are likely to increase your total debt amount?

a. fixed
b. variable
c. periodic
d. all of the above

What percentage of your income should go towards savings or investments, according to recommended spending guidelines?

a. 10 percent
b. 15 percent
c. 20 percent
d. 25 percent

Which of the following examples are long-term financial goals?

a. pay-off a home
b. save for college
c. obtain an auto loan
d. all of the above

Several steps are required to create a budget, what step should be taken first?

a. gather financial statements
b. evaluate income and expense
c. track spending
d. set financial goals

Creating and maintaining a budget will help you:

a. make better financial decisions
b. spend less money
c. obtain a loan
d. all of the above