Spending Decisions and Behaviors Quick Check
Which of these are financial goals? Select the two correct answers.
ANSWERS - saving for college AND making a monthly deposit on your savings account
In the 50/30/20 rule, what does 50 represent?
ANSWER - 50% of income for needs
Which of the following is a long-term financial goal?
ANSWER - contributing to a retirement account
Which options are spending needs? Select the two correct answers.
ANSWERS - lunch brought from home AND a notebook for your homework
Which of these expenses is a spending want?
ANSWER - a new video game
all correct thank you :)
Correct answers:
- Saving for college
- Making a monthly deposit on your savings account
50% of income for needs
Contributing to a retirement account
Spending needs:
- Lunch brought from home
- A notebook for your homework
Spending want:
- A new video game
To determine which of these are financial goals, you should consider their characteristics. Financial goals are specific objectives that involve managing money and achieving desired outcomes. Therefore, the two correct answers are saving for college and making a monthly deposit on your savings account because they involve setting aside money for future use and financial growth.
Next, let's understand the 50/30/20 rule. This rule is a popular budgeting guideline that suggests allocating a certain percentage of your income to different categories. The numbers in the rule represent the percentage of your income to allocate to specific areas. In this case, the 50 represents 50% of your income, which is allocated to covering your needs or essential expenses like rent, food, utilities, and transportation.
Identifying long-term financial goals involves considering the time frame for achieving them. Long-term goals typically span several years or even decades. Among the options mentioned, contributing to a retirement account is a long-term financial goal. This goal involves saving and investing money to ensure financial security during retirement.
To determine spending needs, assess whether the expenses are essential for daily living or academic activities. From the options provided, lunch brought from home and a notebook for your homework are considered spending needs. These items are essential to meet your basic needs or academic requirements.
Lastly, a spending want refers to an expense that is not crucial for daily living but is desired or pleasurable. Among the options given, purchasing a new video game qualifies as a spending want. It is not a necessity but rather something that one may choose to spend money on for entertainment purposes.