Questions and Answers
Buying a new car can create a financial challenge because?
car payments must become part of the budget
What is the most acceptable and easy way to revise a budget to allow for the purchase of a new couch?
Cook dinners at home instead of going out to eat
Which expense category will most likely be changed to allow money for the purchase of a car?
entertainment
A good rule is to spend no more than 25-30% of your ______ income on housing.
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What should Daniel do next after deciding he can purchase a new computer for $279 or a refurbished computer for $100?
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When planning a budget, the biggest consideration should be the?
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Which step in the decision-making process should Simon now take after spending all his money on groceries?
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Some major considerations when deciding on housing are needs and ____.
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What is the first step in the decision-making process?
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What is a main disadvantage of leasing a vehicle compared to buying a vehicle?
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Study Notes
Financial Challenges of Car Purchases
- New car purchases create financial challenges due to obligatory car payments that must fit within a budget.
Adjusting Budgets for New Purchases
- Cooking at home instead of dining out offers a simple and effective method to adjust a budget for purchases like a new couch.
Expense Category Adjustments
- To allocate funds for a car purchase, entertainment expenses are often the first category to be modified.
Housing Cost Guidelines
- Recommendations state that individuals should spend no more than 25-30% of their gross income on housing costs.
Laptop Purchase Decision
- Daniel should analyze the advantages and disadvantages of both new and refurbished laptops before making his final decision on which to buy.
Budget Planning Priorities
- The primary consideration in budget planning is understanding the total income available for expenditure.
Decision-Making Evaluation
- After purchasing a computer and encountering budget shortfalls, Simon should focus on evaluating the results of his spending choices.
Housing Considerations
- Key factors in housing decisions include personal needs and the established budget.
Starting the Decision-Making Process
- Identifying available choices is the initial step in the decision-making process.
Vehicle Leasing Disadvantages
- A significant drawback of leasing a vehicle compared to purchasing is the higher upfront costs associated with leasing contracts.
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Description
Test your knowledge on personal financial planning with these flashcards. Learn how to manage your budget effectively, make decisions about major purchases, and adjust your spending habits. Ideal for anyone looking to improve their financial literacy.
