A person might adjust their budget to

accommodate changes in income or expenses.

Which of the following best illustrates the concept of pay yourself first?

Putting a portion of income into savings before paying bills.

Which element is necessary for establishing a financial goal?

Set a time limit in which the goal will be achieved.

Which statement best reflects how a person should approach the creation of an emergency fund?

As soon as possible, deposit 3-6 months of income in a savings account.

Which equation illustrates a balanced budget?

Total expenses + savings = total income.

How might advertising potentially influence a person’s spending?

Creating a sense of urgency to purchase a product.

What is considered the best way to prevent identity theft?

Shredding documents containing sensitive information.

To support the creation of a realistic budget, a person might

review past expenses and income to determine spending patterns.

What might a person do if they consistently spend less than budgeted?

Allocate the excess funds towards savings or debt repayment.

Which of the following financial objectives is an example of a SMART goal?

Save $500 each month for the next 12 months to build an emergency fund.

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W!se Practice Questions - Budgeting/Spending Plan

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Practice questions for the W!se Financial Literacy Test organized by Test Blueprint.

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Questions 12

Answers

1
Which of the following is considered a variable expense?
Mortgage payment.
Car loan payment.
Grocery.
Homeowner’s insurance premium.
2
A person might adjust their budget to
keep spending within a predetermined limit.
spend more money on impulse purchases.
ignore financial statements and bills.
accommodate changes in income or expenses.
3
Which of the following best illustrates the concept of pay yourself first?
Putting a portion of income into savings before paying bills.
Setting up a direct deposit instead of receiving a paper check.
Spending all income on daily expenses and saving what is left over.
Borrowing money to cover major purchases.
4
Which element is necessary for establishing a financial goal?
Set a time limit in which the goal will be achieved.
Get input from a financial specialist.
Establish an emergency fund before focusing on financial goals.
Focus on goals that quickly increase your net worth.
5
Which statement best reflects how a person should approach the creation of an emergency fund?
Pay off all debts then deposit 3-6 months of income in a CD.
As soon as possible, deposit 3-6 months of income in a savings account.
Invest 6-12 months of income in stocks before making a major purchase.
Keep 3-12 months of income in cash in your home for ease of access.
6
Which equation illustrates a balanced budget?
Net income = Total expenses.
Total expenses + savings = total income.
Total income = total expenses – savings.
Gross income = variable expenses + fixed expenses.
7
How might advertising potentially influence a person’s spending?
Encouraging them to save money.
Providing unbiased information about products and services.
Promoting responsible budget practices by offering discounts on purchases.
Creating a sense of urgency to purchase a product.
8
What is considered the best way to prevent identity theft?
Sharing personal information on social media.
Providing personal information to unknown callers.
Shredding documents containing sensitive information.
Using the same password for all accounts.
9
To support the creation of a realistic budget, a person might
request digital copies of financial statements and bills.
set a monthly spending limit but regularly exceed it.
make impulse purchases without tracking expenses.
review past expenses and income to determine spending patterns.
10
What might a person do if they consistently spend less than budgeted?
Allocate the excess funds towards savings or debt repayment.
Increase their spending on non-essential goods and services.
Ignore their budget.
Add the excess funds to their entertainment budget.
11
Which of the following financial objectives is an example of a SMART goal?
I plan to buy a new car next year.
Save $500 each month for the next 12 months to build an emergency fund.
I want to save money.
I hope to become a millionaire someday.
12
What is the best reason for a person to use their emergency fund?
Unforeseen medical expenses.
Home renovations.
To pay for a luxury vacation.
Regular monthly bills.

W!se Practice Questions - Budgeting/Spending Plan Flashcards | StudBud