Chapter 6 - Budget

True/False
Indicate whether the sentence or statement is true or false.

____ 1. When you create your budget, you should prioritize and rank your goals.
____ 2. Fixed expenses are the amounts you have already committed to spend.
____ 3. Flexible expenses are amounts that you can choose to spend or not spend.
____ 4. If you want to cut your spending, you'll have to start with your fixed expenses.
____ 5. The goals you set affect your family, future family, and community.
____ 6. Adjusting a budget will be easier if you attempt to change flexible spending rather than fixed spending.
____ 7. A successful budget requires accurate record keeping.

Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.

____ 8. A plan for dividing up your income between spending and saving options is a ____.
a. filing system
b. budget
c. life-span goal
d. financial diary
____ 9. Which of the following items would be considered a fixed expense?
a. clothing purchases
b. car payments
c. telephone bills
d. grocery bills
____ 10. Which of the following is a flexible expense?
a. restaurant meals
b. rent on your apartment
c. bus fair to ride to work
d. car insurance payment
____ 11. Hector's decision to save part of his income each week to buy a DVD player is considered ____.
a. setting a life-span goal
b. creating a budget worksheet
c. setting a short-term goal
d. completing a budget process
____ 12. A person's budget should take into account ____.
a. short-term goals
b. career goals
c. life-span goals
d. all of these

Completion
Complete each sentence or statement.
13. Amounts that you have already committed to spend on a regular basis from each paycheck are called
_________________________.
14. Ricardo has just graduated from college and obtained an entry-level management position at a local store. In
the next two years, he would like to move into a bigger apartment, buy a new car, visit his family in Brazil,
and buy new clothes. His monthly income is $2,400. He realizes that he will need to prepare a budget work-
sheet. Before he can properly budget, he will need to ____________________ his goals.
15. Jackie keeps all of her receipts, paycheck stubs, bank statements, and other financial records in the top drawer
of her dresser. She has no idea where or how she spends her money. Although it is good that she keeps her fin-
ancial records, to understand how she spends her income she needs to establish a(n)
_________________________.
16. DeShandra and Marcus were recently married and moved into an apartment. They examined their combined
expenses in order to prepare a budget. Some of their monthly expenses included rent ($425), car payments
($200 and $175), car insurance ($125), and a college loan ($85). Each of these is considered to be a(n)
____________________ expense.
17. Dorothy decides to prepare a budget worksheet to help her reach her financial goals. This month she received
a $300 cash birthday gift from her grandmother and a $100 bonus at work. This $400 represents
_________________________ on her worksheet.
18. Michelle enjoys watching NBA basketball. One day a friend offers to sell Michelle a center court ticket for
$85. Michelle agrees and gives her $85 for a ticket. The purchase of this ticket is considered a(n)
____________________.

Short Answer

19. Consider your expenses as a student. List at least two items that would be your fixed expenses and at least
two items that would be flexible expenses.
 Chapter 6 - Budget
Answer Section

TRUE/FALSE

1. ANS: T
2. ANS: T
3. ANS: T
4. ANS: F
5. ANS: T
6. ANS: T
7. ANS: T

MULTIPLE CHOICE

8. ANS: B
9. ANS: B
10. ANS: A
11. ANS: C
12. ANS: D

COMPLETION

13. ANS: fixed expenses

14. ANS: prioritize
15. ANS: filing system
16. ANS: fixed
17. ANS: uneven income
18. ANS: flexible expense

SHORT ANSWER

19. ANS:
Answers may vary. Fixed: lunch money and bus fares; flexible: entertainment and fashion clothing.