6.01 semester test, life skills, part one
1. What is the definition of a budget?
a) A plan for spending and saving money
b) A list of expenses
c) A detailed financial report
d) A list of financial goals
2. Which of the following is NOT a common budget category?
a) Housing
b) Entertainment
c) Food
d) Transportation
3. What is the purpose of setting financial goals?
a) To track your spending
b) To limit your expenses
c) To focus your spending and saving efforts
d) To increase your debt
4. True or False: Emergency savings should equal three to six months of living expenses.
5. What is the purpose of a credit score?
a) To determine your ability to save money
b) To calculate your net worth
c) To assess your financial responsibility
d) To determine your monthly income
6. Which of the following is NOT a factor that affects your credit score?
a) Payment history
b) Length of credit history
c) Investment portfolio
d) Credit utilization ratio
7. True or False: It is important to review your credit report regularly to check for errors or fraudulent activity.
8. What is the purpose of an emergency fund?
a) To fund your daily expenses
b) To provide ready cash for unexpected expenses or emergencies
c) To pay off debt
d) To invest in the stock market.
9. What is the 50/30/20 rule?
a) A guideline for saving money
b) A rule for budgeting your income: 50% for needs, 30% for wants, and 20% for savings and debt repayment
c) A rule for spending money: 50% on wants, 30% on needs, and 20% on savings
d) A guideline for investing in the stock market
10. Why is it important to create and stick to a budget?
a) To limit your spending
b) To achieve financial goals
c) To avoid debt
d) All of the above