Home > Basics > Beginner
Basics Beginner: Building a Budget

Test your knowledge

Choose wisely. There is only one correct answer to each question.

0%
Keep studying!
Review your answers below to learn more.
1.
Which of the following is an example of a non-discretionary expense?
Choose wisely. There is only one correct answer.
Transportation costs. While one may think that donations to charity, gifts to individuals, and entertainment costs are non-discretionary, one actually has a great deal of choice as to how much and when one can incur those expenses. On the other hand, one must incur transportation costs in order to earn money to pay for the other expenses.
2.
Borrowing money is a way to increase your inflows to your budget.
Choose wisely. There is only one correct answer.
True. Borrowing increases your inflows, even though it will need to become an outflow at some point in the future.
3.
A budgeting tool that is "read-only" _______ make financial transactions.
Choose wisely. There is only one correct answer.
Cannot. "Read-only" means that you can read the data in it, but you cannot use it to transact. This is a safety feature.
4.
Budgeting software can provide financial forecasts for your financial data.
Choose wisely. There is only one correct answer.
True. Not all software offers this, however. The ones that do are more advanced and pricey.
5.
If you earn $30,000 gross, your budget should be based on that $30,000.
Choose wisely. There is only one correct answer.
False. Your budget should be based on your net pay, not your gross pay.
6.
Your financial accounts may already offer some budgeting tools.
Choose wisely. There is only one correct answer.
True. Many financial institutions provide budgeting software that is accessible when you log in to your account online.
7.
The most effective way to fill in the inflows and outflows when you make your very first budget is to _______.
Choose wisely. There is only one correct answer.
Use the past as a guide. Take the average of several months in the past and use that. You can refine it later.
8.
It is reasonable for most people to expect to pay about 10% of their income on food.
Choose wisely. There is only one correct answer.
True. Amounts will vary, but you should expect to pay about 10% -- unless you are wealthy.
9.
The key to successful financial planning is managing one's _______.
Choose wisely. There is only one correct answer.
Cash flow. The key to a successful financial plan is managing one's cash flow.
10.
In a budget, inflows and income are two different things.
Choose wisely. There is only one correct answer.
True. Inflows are money that comes from any source, including borrowing, whereas income is money earned.