Name: Class: _ Date: _ Chapter 6 Overview Worksheet Packet - Summer School Consumer's Education True/False Indicate whether the statement is true or false.if false, re-write the sentence to make the statement true. 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 spend $20 more for groceries each week than you originally budgeted, then you are "over" budget. 5. If you want to cut your spending, you'll have to start with your fixed expenses. 6. The goals you set affect your family, future family, and community. 7. Stuffing all your receipts into a grocery bag is a good way to create an efficient filing system. 8. When first employed, many young people make the mistake of trying to buy too many luxury items. 9. Adjusting a budget will be easier if you attempt to change flexible spending rather than fixed spending. 10. A successful budget requires accurate record keeping. 1
Name: Multiple Choice Identify the choice that best completes the statement or answers the question. 11. 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 12. A planning document on which you record your expected income, actual income, and spending over a short time is a. a. bank statement b. checkbook c. budget worksheet d. financial diary 13. Important things you hope to achieve over a number of years are. a. short-term goals b. life-span goals c. budgets d. future goals 14. If Bob's car payment is $172 per month, his annual budget amount for car payments would be. a. $1,064.00 b. $986.00 c. $2,064.00 d. $1,720.00 15. Which of the following items would be considered a fixed expense? a. clothing purchases b. car payments c. purchases of cosmetics d. grocery bills 16. Which type of software would best suit your needs if you wanted to prepare a budget worksheet? a. spreadsheet b. word processing c. database d. an Internet search engine 17. Which of the following items are not luxury items? a. flared jeans b. designer jeans c. denim jeans d. stone washed jeans 18. Which of the following are steps in the budget process? a. determine your goals b. estimate your income and expenses c. create a budget worksheet d. all of the above 2
Name: 19. John receives $10 per week for allowance and $50 per week from his job. His total income for a month containing four weeks would be. a. $420 b. $240 c. $140 d. $180 20. Successful budgeting depends on how well you set your financial. a. limits b. goals c. wants d. needs 21. Which of the following is a flexible expense? a. restaurant meals b. rent on your apartment c. bus fare to ride to work d. car insurance payment 22. Although she earns a good salary, Susan frequently cannot pay all of her bills. Frustrated, she decides to predict and then record all of her income and spending for one month. This is known as creating a(n). a. budget b. income statement c. financial goal d. budget worksheet 23. 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 24. Which of the following is likely to be an uneven fixed expense? a. buying groceries b. making your car payment c. entertainment d. paying your car insurance 25. A person's budget should take into account. a. short-term goals b. career goals c. life-span goals d. all of these 26. Something one hopes to achieve within the next year is a. a. short-term goal b. life-span goal c. retirement goal d. career goal 3
Name: 27. Deciding to attend college to become a dentist is an example of a. a. fixed goal b. short-term goal c. life-span goal d. variable goal 28. Something important that one hopes to achieve during his or her life is a. a. short-term goal b. fixed goal c. variable goal d. life-span goal 29. Repayment of a college loan would be considered a(n). a. luxury item b. flexible expense c. fixed expense d. optional expense 30. Which of the following is not part of an effective budget preparation process? a. create a budget worksheet b. estimate income c. estimate expenses and savings d. enter most expenses as "miscellaneous" Completion Complete each statement. 31. Buying a home would be a(n) goal. 32. Buying a new shirt would be a(n) goal. 33. Amounts that you have already committed to spend on a regular basis from each paycheck are called. 34. If Michael and Kathy want to buy a new home, they will need to budget savings for a number of years. After the purchase, their payments for ongoing maintenance are expenses. 35. Harry and Melissa have been married for a year. They have kept separate checking accounts in which they deposit their individual paychecks. Although they share expenses equally, neither one knows what the other earns. Now they have decided to purchase a home. The loan officer at the bank has suggested they prepare a budget and begin saving money for the down payment. The best document they could use to begin this communication process would be a(n). 36. Loretta is planning her college wardrobe. She has only $450 to spend. While at the local mall shopping for jeans, she spots a pair of "beautiful" shoes costing $120. These shoes would be considered a(n) good. 4
Name: 37. Tino enjoys music and playing the drums. He wants to buy a new base drum so he takes a part-time job after school. His job nets him $400 a month. The drum he wants to buy costs $600. Given the cost and the amount of time taken to reach his goal, the drum set purchase would be considered a(n) goal. 38. 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 $2,800. He realizes that he will need to prepare a budget worksheet. Before he can properly budget, he will need to his goals. 39. 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 financial records, to understand how she spends her income, she needs to establish a(n) system. 40. 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 ($725), car payments ($300 and $275), car insurance ($175), and a college loan ($185). Each of these is considered to be a(n) expense. 41. Dianne and Ron have been living in an apartment for five years. Although they have a limited income, they dream of owning a home someday. In their budget, they decide to set aside $100 each month until they can afford to make the down payment on a home. They have begun planning to reach a(n) goal. 42. 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. 43. Antonio owns a trucking company. For safety and legal reasons, he must replace the tires on his trucks every 50,000 miles. The purchase of these tires is considered a(n) expense. 44. 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) expense. Short Answer 45. Nate and Holly went to a Chinese restaurant. Holly's fortune cookie read, "Successful savers pay themselves first." Explain the wisdom of this fortune cookie. 5