Questions and Answers
When should fixed and variable monthly budgeted expenses first be planned?
at the start of each month
Which is the best way to achieve long-term financial goals?
Save more money from net income
Which is an example of an income deduction?
retirement savings
A short-term financial goal might include saving for?
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An expense that is constant each month is called a _____ expense.
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From what part of income should someone take savings?
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In order to stay on track for long-term financial goals, money for emergency spending should be taken first from your?
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When creating a budget, you must track both your budgeted expenses and your _____ expenses.
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What is most likely the reason variable expenses should be planned after fixed expenses?
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Why might variable expenses change a great deal at different times of year?
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To change gross income, someone would need to?
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What effect would a tax increase have on income?
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When a person invests income, he or she?
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Paying for transportation to and from work is an example of?
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Why is net income lower than gross income?
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Study Notes
Budgeting Basics
- Fixed and variable monthly budgeted expenses should be planned at the start of each month.
- A best practice for achieving long-term financial goals is to save a higher portion of net income.
Income Deductions
- An example of an income deduction is retirement savings, which reduces the taxable income.
Financial Goals
- Short-term financial goals may include saving for items like furniture.
- Fixed expenses are those that remain constant month-to-month, such as rent or mortgage.
Savings Strategies
- Savings should come from discretionary income, which is what remains after necessary expenses are covered.
- To stay on track with long-term financial objectives, prioritize emergency spending from discretionary funds.
Budget Tracking
- When creating a budget, it is essential to track both budgeted and actual expenses to monitor financial health.
- Variable expenses should be planned after fixed expenses because they are more flexible and can fluctuate.
Seasonal Variability
- Variable expenses, like heating and cooling costs, often change significantly with seasons, impacting monthly budgets.
Income Adjustments
- To change gross income, one needs to find ways to earn more money, such as taking on additional work.
- A tax increase impacts disposable income but does not alter gross income figures.
Investment Insight
- Investing income involves utilizing funds in ways that will increase their future value, contributing to financial growth.
Expense Categorization
- Transportation costs for commuting to work are categorized as necessary expenses and are neither variable nor discretionary.
- Net income is typically lower than gross income due to withholdings, such as taxes and other deductions taken from earnings.
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Description
This quiz covers essential concepts in budgeting, including fixed and variable expenses, income deductions, and savings strategies. Understand how to set financial goals and track your budget effectively to achieve long-term financial health.
