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.
If your expenses are less than your income, the resulting difference can be called your savings.
Choose wisely. There is only one correct answer.
True. The money left over is savings, which you can use to help you reach your future financial goals.
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.
Which of the following is the best example of a variable expense for most people?
Choose wisely. There is only one correct answer.
Entertainment. While transportation, food, cleaning, personal care costs, and utility bills may vary slightly from month to month, they will tend to be very close to the average for a year or more, while entertainment costs, which are discretionary, tend to vary much more from month to month.
4.
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.
5.
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.
Choose wisely. There is only one correct answer.
True. Some budget software can alert you when certain things go on in your accounts.
6.
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.
7.
When planning a budget, how much should you expect to pay in federal, state, Social Security, and Medicare taxes?
Choose wisely. There is only one correct answer.
25-35 percent. Federal and state income taxes, Social Security, and Medicare taxes generally will reduce your gross earnings from work by 25–35 percent.
8.
A good budget can sometimes allow a month's expenses to exceed that month's income.
Choose wisely. There is only one correct answer.
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.
9.
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.
10.
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.