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Basics Beginner: Building a Budget

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1.
All online budgeting tools cost money.
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False. Many of them are free to use.
2.
If you earn $30,000 gross, your budget should be based on that $30,000.
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False. Your budget should be based on your net pay, not your gross pay.
3.
Which of the following is an example of a non-discretionary expense?
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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.
4.
When your budgeting software sends you a text or email notifying you of a transaction in your financial accounts, that text or email is called an alert.
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True. Some budget software can alert you when certain things go on in your accounts.
5.
Only persons who handle large sums of cash need and have a budget.
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False. Everyone who handles money has a budget, whether they know it or not.
6.
Housing is typically the largest expense in the average person's budget.
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True. In most people's budgets, housing is the biggest expense.
7.
A good budget can sometimes allow a month's expenses to exceed that month's income.
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True. A good budget is always balanced, even if some months' expenses exceed income, as long as there are adequate inflows from past or future savings.
8.
Which type of budgeting tool is most likely to update your financial data fastest?
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An online one. As a general rule, online tools update regularly and more quickly than others.
9.
An inflow of cash from savings to make a purchase is called income.
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False. Income is money earned from work, earned from investments, or received as a gift.
10.
One benefit of keeping a written record of your income and expenses is that it can help you project when you will need additional funds.
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True. A written record will show you when future shortfalls may appear.