Section 4: Budget and Expenses

1: What’s the main purpose of creating a budget?

To limit all spending

To track your income only

To plan and manage your finances effectively

To invest in high-risk ventures

2: How does tracking spending help your financial situation?

It ensures you spend more on wants than needs

It allows you to ignore financial trends

It helps you understand where your money goes and make informed decisions

It guarantees you’ll never overspend

3: What’s the first step in creating a budget?

Set unrealistic financial goals

Track your spending habits

Immediately cut out all discretionary expenses

Rely on credit cards for all expenses

4: What’s the difference between a “need” and a “want”?

There is no difference; they mean the same thing

A “need” is something necessary for survival, while a “want” is optional

A “need” is an impulse purchase, while a “want” is essential

A “need” is something luxurious, while a “want” is practical

5: Which of the following is considered a “need”?

Designer handbags

Health Insurance

Groceries

Both B & C

6: How can identifying needs vs. wants impact your budget?

It might lead to overspending

It helps prioritize spending on essentials before non-essentials

It won’t have any effect on your budgeting process

It only matters when creating long-term investment plans

7: When tracking your spending, what should you do with the information you gather?

Ignore it and continue spending as usual

Adjust your budget to match your spending habits

Immediately cut all discretionary expenses

Increase your spending on non-essentials

8: What’s a potential benefit of cutting unnecessary expenses?

It guarantees you’ll be financially secure forever

It frees up money for savings and important goals

It leads to increased debt

It’s unnecessary, as expenses should never be cut

9: What’s the danger of ignoring your spending habits?

You’ll always have enough money regardless of your habits

It ensures you’ll make wise financial decisions

Ignoring spending habits has no consequences

It might lead to financial stress and overspending

10: How does creating a budget and tracking spending contribute to financial well-being?

It helps you gain control over your finances, reduce debt, and work towards financial goals

It’s unnecessary and won’t have any impact

It ensures you never have to make tough financial choices

Creating a budget will make you rich