Gr 11 Math Lit: Ch 3.2 Sources of Income

What is the primary goal of income diversification?

To reduce risk by having multiple sources of income

What is the first step in understanding and managing sources of income?

Identify all sources of income

What is the purpose of calculating net income?

To know how much income is available for spending

Why is it important to set financial goals?

To save and invest a portion of income

What is the purpose of monitoring and adjusting income and expenses?

To ensure the budget is being followed

What is the relationship between gross income and net income?

Gross income is the total amount of income, and net income is the income available for spending

What is the main difference between earned income and unearned income?

Earned income is received from employment, while unearned income is received from sources other than employment

What is the purpose of creating a budget?

To allocate income to cover expenses, savings, and investments

What is net income?

The income remaining after all deductions, such as taxes, pension contributions, and other mandatory deductions

Why is saving important in personal finance?

To set aside a portion of income for future use or emergencies

What is the role of income tax in personal finance?

To recognize the government's role in personal finance and how it is calculated based on income brackets and tax rates

What is the main difference between short-term and long-term goals?

Short-term goals are focused on immediate needs, while long-term goals are focused on future needs

What is gross income?

The total income earned before any deductions or taxes

What is an example of government transfers?

Social security benefits

Which of the following is NOT a step in understanding and managing sources of income?

Determine Net Worth

What is the primary purpose of subtracting deductions from gross income?

To determine the net income

Which of the following is an example of discretionary spending?

Entertainment

What is the primary reason for setting aside money for taxes?

To ensure compliance with tax laws

What is the purpose of regularly reviewing income and expenses?

To adjust the budget as necessary

What is the primary benefit of establishing short-term and long-term financial goals?

To create a plan to achieve financial goals

What is the primary source of earned income?

Salaries and wages

Which of the following is an example of a deduction?

Medical aid contributions

What is the primary purpose of budgeting?

To create a plan for allocating income

What is the difference between short-term and long-term goals?

Short-term goals are for a shorter period, while long-term goals are for a longer period

What is the purpose of filing taxes?

To declare income to the tax authorities

What is the main purpose of financial planning?

To set and achieve financial goals

What is the difference between gross income and net income?

Gross income is before deductions, while net income is after deductions

What is the purpose of government transfers?

To provide financial assistance to individuals

What is the primary purpose of identifying all sources of income in personal finance?

To understand the distribution of income among various sources

Which of the following is a characteristic of a well-planned budget?

It includes a category for unexpected expenses

What is the primary benefit of setting aside money for taxes in personal finance?

It ensures compliance with tax laws and avoids penalties

Which of the following is a characteristic of short-term financial goals?

They are typically achieved within a period of 1-5 years

What is the primary characteristic of unearned income?

It is received from sources other than employment

What is the purpose of calculating gross income?

To find the total income earned before deductions

What is the primary purpose of regularly reviewing income and expenses in personal finance?

To ensure that the budget is being followed

Which of the following is a characteristic of a well-planned financial goal?

It is specific, measurable, achievable, relevant, and time-bound

What is the primary benefit of creating a budget?

It helps to allocate income effectively

What is the primary purpose of income tax?

To fund government programs

What is the primary difference between short-term and long-term goals?

Timeframe

What is the primary purpose of deducting taxes from gross income?

To calculate net income

What is the primary benefit of financial planning?

It helps to achieve financial goals

What is the primary purpose of filing taxes?

To declare income