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Basics (Personal Finance) Beginner: Budgeting

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1.
When it comes to using a budget, what does it mean to 'pay yourself first'?
Choose wisely. There is only one correct answer.
Set aside money from your income into a savings plan. Paying yourself first ensures that you are prepared to deal with future financial issues.
2.
Making a decision to purchase something based on your wants is less expensive than basing it on your needs.
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False. Wants are generally more expensive. You may need to buy a pair of jeans, and may want a $150 pair of designer jeans but you only need jeans that cost under $40.
3.
You should avoid spending money on wants.
Choose wisely. There is only one correct answer.
False. Wants are okay to spend money on and may be items that we allow ourselves to pay for as a reward for hard work and saving. The key is to ensure you are not forgoing spending money on or saving for other needs not taken care of yet. In other words, what is the opportunity cost of paying for your want?
4.
If you spend more than the net income you make in a month, you will have to _________.
Choose wisely. There is only one correct answer.
Any of the above. The money has to come from somewhere. Dipping in to your savings account steals money you have allocated for other financial goals. Borrowing by buying products using a credit card gets you off the hook from being short for the month but causes you to go into debt and carry a loan balance at a very expensive interest rate. Being late on a bill is never a good idea and can affect your credit score.
5.
If you are using an online budgeting tool that is linked to your financial accounts, reviewing how your information is securely maintained is important.
Choose wisely. There is only one correct answer.
True. Ensuring you are dealing with a known company that describes how they keep your information secure and private is critical. Make sure the URL starts with 'https' instead of 'http' and look for the site to have a green address bar and lock icon.
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Introduction to Budgeting What Is a Budget? The Anatomy of a Budget Your Spending Choices in Your Budget Budgeting Activity Selecting a Budgeting Tool Summary of Budgeting Find out what you learned