Deck 3: Planning and Budgeting

Question 1

What is a good way to keep track of spending?

A) Keep a spending journal
B) Don't think; just spend
C) Have your parents pay for everything
D) Trust someone else keep track of it for you

Answer 1

Keep a spending journal

Question 2

An alternative that must be forgone in order to pursue another option is an:

A) Opportunity
B) Alternative Cost
C) Annuity Option
D) Opportunity Cost

Answer 2

Opportunity Cost

Question 3

What is opportunity cost?

A) The cost of purchasing items on credit and having to pay it off in the future
B) The cost of an alternative that must be forgone in order to pursue another option
C) Spending money today without considering other alternatives
D) Failing to stop the "little leaks" in your budget which results in failing to meet your financial goals

Answer 3

The cost of an alternative that must be forgone in order to pursue another option

Question 4

Which financial statement allows you to find your net cash flow for a specific period?

A) Personal Cash Flow Statement
B) Balance Sheet
C) Expense Statement
D) Net Worth Statement

Question 5

Which is an example of an asset?

A) Student loans
B) Car payments
C) Laptop
D) Electricity bill

Question 6

The main opportunity cost of going to college is:

A) Money you would have earned working instead,in addition to the cost of attending college
B) The cost to attend college
C) Loss of time with friends
D) Cost of trips,classes,and things that come up that wouldn't have,if you hadn't gone to school

Question 7

Which of the following does not belong in the Personal Financial Statement?

A) Assets
B) Expenses
C) Liabilities
D) Mortgages

Question 8

What is the net cash flow if total income last month was $2,000,but expenses totaled $2,500,and the shortage was covered on a credit card?

A) -$500
B) $500
C) $2,500
D) $4,500

Question 9

Which is an example of opportunity cost?

A) The money you would have earned if you had not attended college
B) Dining out on a daily basis of $10 a day,which could have been invested and earning interest instead
C) Not buying a big screen TV on credit,and not paying interest on it in the future
D) All choices are correct

Question 10

Calculate the opportunity cost of one extra year of college if tuition,room and board fees,and spending money is $19,000,and the estimated salary upon graduation is $38,000.

A) $57,000
B) $19,000
C) $38,000
D) $29,000

Question 11

If your total liabilities are $1,250 and total assets are $750,what is your net worth?

A) $500
B) -$500
C) $2,000
D) $1.67

Question 12

On a balance sheet,you calculate how much your personal property is worth based on what?

A) How much you bought it for
B) What it would sell for at a garage sale
C) How much it would be to replace it
D) How much you want it to be worth

Question 13

How quickly an asset can be turned into cash is known as:

A) Liquidity
B) Liability
C) Net worth
D) Asset to Cash Ratio (ATC)

Question 14

What is the second logical step in gaining perspective into your financial situation?

A) Understand the elements of personal financial statements
B) Keep a spending journal
C) Create a personal cash flow statement
D) All choices are incorrect

Question 15

If you buy a bag of pretzels ($0.75 per bag)and a Pepsi ($1.25)every weekday at work from a vending machine,how much do you spend on the vending machine products over the course of a year (52 weeks)?

A) $520.00
B) $525.00
C) $728.00
D) $455.00

Question 16

Personal property assets,including your clothing,furniture,bicycles,and electronic equipment,should be valued at _______ on your balance sheet.

A) Purchase price
B) Resale prices
C) Assets
D) Cash value

Question 17

If you spend $5.00 on average each day eating fast food,how much will you spend on average each month?

A) $7,280
B) $120
C) $35
D) $150

Question 18

Which of the following is not a liability?

A) Mortgage
B) Retirement funds
C) Car payment
D) Credit card debt

Question 19

A personal cash flow statement measures:

A) Cash inflows only
B) Cash inflows and outflows
C) Cash outflows only
D) How much cash you have on hand

Question 20

Which of the following are reasons for keeping a spending journal?

A) To become more aware of what you are buying and how much it costs
B) To help you think about the value of what you are buying before you spend
C) To track where your money goes so you can stop the "little leaks" by making changes in your spending habits
D) All of these

Question 21

Which one of these is not a way to achieve sustainable consumption?

A) Aligning spending with priorities
B) Simplification
C) Using credit when needed
D) Understanding differences between needs and wants

Question 22

Which of the following is NOT an example of sustainable consumption?

A) Growing your own vegetables and herbs
B) Adjusting your thermostat to use less energy while you are gone during the day and when you are sleeping at night
C) Unplugging lamps that rarely get used
D) Keeping the lights on while you are not home or when you leave the room to show that someone is home

Question 23

Dave has decided to budget his money and never spend more than he makes.What is Dave's budgeting strategy called?

A) Net cash flow
B) Saving and spending plan
C) Consumption adjustment
D) Sustainable consumption

Question 24

To create an accurate budget you should

A) Keep a spending journal
B) Use budget templates
C) Discuss budget goals with spouse or housemates
D) All choices are correct

Question 25

All of the following are methods of saving money except:

A) Paying yourself first
B) Stopping 'little leaks' and making big adjustments
C) Maintaining a mode of sustainable consumption
D) All choices are ways of saving money

Question 26

Sustainable consumption means:

A) Spending generously
B) Keeping track of the things you need and distinguishing needs from wants
C) Consuming as much as possible
D) All choices are incorrect

Question 27

Sustainable consumption is defined as what?

A) Living within your means
B) Spending all your money
C) Setting a specific spending limit
D) Consuming more goods,but cheaply

Question 28

What is NOT an example of sustainable consumption?

A) Running up credit card debt
B) Eating leftovers instead of eating out
C) Only spending what you make
D) Turning off lights when you leave a room

Question 29

Sustainable consumption is:

A) Consuming more than you can afford
B) Making thoughtful choices about what you can afford,and sticking to it
C) Living in poverty
D) Taking out a loan to sustain yourself

Question 30

If the median income for someone with an associate's degree is $9,100 higher annually than for someone with a high school degree,and the cost of schooling for the two years is $10,000 each year,at what point does the investment into the education break even?

A) 1.9 years
B) 2 years
C) 2.1 years
D) 2.2 years

Question 31

What is the opportunity cost of going to college?

A) The cost of attending college minus the money you would have earned
B) The money you would have earned if you had worked instead plus the cost of attending college
C) The money spent on shopping and partying
D) The money you would have earned if you had worked minus the cost of attending college

Question 32

What is not an example of sustainable consumption?

A) Having a night light on all the time
B) Unplugging appliances that aren't being used
C) Turning off lights when you leave
D) Adjusting the thermostat

Question 33

Which is an example of a budget?

A) Making a plan of around your income,savings and spending
B) Spending your money at will
C) Balancing your checkbook
D) Assuming someone will give you money every month

Question 34

According to the Bureau of Labor Statistics in 2009,the unemployment rate and the median dollars earned:

A) May or may not be correlated by degree
B) Have an inverse relationship: the higher the education level attained,the lower the unemployment rate
C) Have a dependent relationship: the higher the education,the higher the unemployment rate
D) There is no relationship

Question 35

Which is not a way to save money?

A) Pay yourself first
B) Use credit cards and debit cards exclusively
C) Automatically transfer money to savings and investments
D) Sit down and create a budget each week or month and follow it

Question 36

The median annual earnings for full-time workers age 25 and older in 2009 was $8,805 higher for someone with an associate's degree than for someone with:

A) A bachelor's degree
B) A high school degree
C) A graduate degree
D) A PH.D.

Question 37

If you wanted to have $1,800 saved up by the end of the year,what amount would you need to save on a daily basis?

A) $4.93
B) $5.00
C) $10.00
D) $3.50

Question 38

Which is NOT a step in building your own personal budget?

A) List all of your fixed payments
B) List all of your variable expenses
C) Record the amount of income and when you receive it
D) Omit expenses you only have once a year

Question 39

Is it worth it,from a financial perspective,to go to college and pursue a degree?

A) Yes - your future earnings will more than make up for the opportunity costs involved
B) No - college can cost too much to make it a good investment
C) If you plan to study hard and get good grades
D) If you do not have to borrow money to pay for it

Question 40

If you want to save money,what is the most important lesson you need to learn?

A) Do not change anything
B) Pay yourself first
C) Spend more money
D) Get a credit card

Question 41

You spend $10 each weekday for lunch and snacks while attending classes.How much should a realistic budget account for you spending on this over the course of an 8-week semester?

A) $50
B) $500
C) $375
D) $400

Question 42

An easy form of sticking to a budget is to have envelopes for every category in your budget,and to place cash in each envelope to match your budgeted amount.

Question 43

What is a budget variance?

A) When your budgeted spending equals your actual spending for the month
B) Expenses that vary from month to month like groceries,dining out,and entertainment
C) The difference between a planned expenditure and the actual amount spent
D) The difference between how much you spend on fixed expenses and variable expenses

Question 44

Each of your spending and savings decisions should be considered in light of:

A) Goals and Debt
B) Opportunity Cost and Goals
C) Debt and Cash Flow
D) Cash Flow and Goals

Question 45

Where do most variances happen in building and sticking to a budget?

A) Amount of monthly income
B) Amount of variable monthly expenses,like entertainment
C) Amount of cash in the bank
D) Amount of fixed monthly expenses,like rent

Question 46

Creating a personal cash flow statement is the first step to gaining a perspective of your financial situation.

Question 47

What is the last section on a standard budget worksheet?

A) End of Year Balance
B) Extraordinary Expenses
C) Variable Monthly Expenses
D) Fixed Payments

Question 48

Opportunity cost is the cost of an alternative that must be forgone in order to pursue a certain action.

Question 49

An itemized summary of estimated income and expected expenditures in a given period is known as a:

A) Budget
B) Budget Variance
C) Budget Reconciliation
D) All choices are incorrect

Question 50

At least how often do the authors suggest a budget review take place?

A) Daily
B) Weekly
C) Monthly
D) Yearly

Question 51

When constructing a budget,you should take all the following into account except for:

A) Spending habits
B) Extraordinary expenses
C) Value of assets
D) Income

Question 52

What is a budget?

A) A checkbook
B) The balance you have at the end of every month
C) Estimated income and expenditures in a given period
D) Something you don't need

Question 53

Net worth is calculated by adding all of one's assets together.

Question 54

An example of opportunity cost would be that of eating out vs.packing your lunch,saving $5.00 each day.

Question 55

What is the first step of building your own budget?

A) List all of your fixed payments
B) Record your income and when you receive it
C) List all of your extraordinary expenses
D) List all of your variable monthly expenses

Question 56

What should not be listed in your budget?

A) Fixed monthly expenses
B) Variable monthly expenses
C) Income
D) Extraordinary income

Question 57

Little changes can make a big difference in spending without forcing major changes in lifestyle.

Question 58

Opportunity cost is something you give up.

Question 59

A possible first step to gaining perspective into your financial situation is to keep a spending journal.

Question 60

A good way to save money is to create a budget and then save whatever amount is left over at the end of each month.

Question 61

Explain sustainable consumption as it relates to budgets.

Question 62

What is the value of a spending journal?

Question 63

Budget variances are where your income and spending differ from your budget.

Question 64

When building a budget,the first step is record your income and when you receive it.

Question 65

Explain the benefits of a weekly budget meeting.

Question 66

Extraordinary expenses are not to be folded into the monthly budget.

Question 67

How do small leaks relate to budgets and opportunity costs?

Question 68

What are the elements of a personal financial statement?