- What is a budget?
- An estimate of how much money you make and how much you spend
- An account you open at your local bank
- A small aquatic mammal
Answer: A. A budget is a way to keep track of income and expenditure to make sure you can afford the things you need — and some of those you want.
- Budgeting is an important step to:
- Build savings
- Boost your credit score
- Eliminate debt
- All of the above
Answer: D. Keeping track of your money — how much you are making, how much you’re spending, and how much you need to set aside — is crucial when it comes to achieving your financial goals, no matter what they are.
- What’s the first step to building a budget?
- List your expenses
- Track your transactions
- List your income
Answer: C. The first step to building a budget is listing your income. Make sure to include your regular salary and any income from side hustles, interest-bearing accounts, or gifts. Once you know how much money you have, then you can subtract your necessary expenses and see how much you’ll have left to work with.
- Which of these is a “fixed” expense?
- Contributions to charity
- Mad money to shop with
- Mortgage payment
Answer: C. “Fixed expense” is another word for an expense that is recurring on a regular basis and usually always the same amount. This can include your mortgage payment, rent, loan payments, and other monthly bills and utilities.
- What is discretionary income?
- The money you spend on luxuries
- Your paycheck
- The extra income you have left after paying for necessities, like taxes and rent
Answer: C. Knowing how much discretionary income you have left over is a key part of deciding what you can then allocate for paying down debt or saving for something big.
- True or False? There is only one right way to make a budget.
Answer: False. Each individual or family financial situation is unique. Some people might have steady paychecks, while others get paid by the job; some people might prioritize paying down their student loans, while others want to save for a house. The key is to find a budget that works best for you and what you want to accomplish.
- Which of the following can help you build and maintain a budget?
- Computer budgeting software
- Mobile banking apps
- Automatic paycheck deductions through your bank
- All of the above
Answer: D. These days there are tons of ways that you can use technology to create a budget, monitor your spending, assess financial goals and progress toward savings, and be sure you remember to set aside part of your income.
- True or False: Once you’ve set up a budget, you can just set it and forget it.
Answer: False. Creating a budget is just one step on the larger financial journey. Even with all the online apps and automatic payment software, you still need to constantly monitor your income, your spending, and your savings so that you can adjust your budget to best suit your financial needs — now and for the future.
- True or False: You don’t have to accomplish this on your own.
Answer: True. While only you and your family understand your specific situation and your unique goals for the future, you can always seek advice, support, and help from your local community banker. They have extensive experience and can help maximize your budget and empower to take control of your finances.