01Under the 50/30/20 rule, 'needs' includes:
- A. Restaurant meals
- B. Minimum debt service
- C. Gym membership
- D. Vacation savings
Reveal answer
B. Minimum debt service is non-discretionary and sits in the 50% needs bucket. Above-minimum paydown moves to the 20% savings bucket.
02A zero-based budget is characterized by:
- A. Percentage allocations across three buckets
- B. Every dollar of income assigned to a category before the month begins
- C. Retroactive categorization at month-end
- D. A single spending limit
Reveal answer
B. Zero-based budgets allocate every dollar in advance. Savings is a category, not the residual.
03For a household with variable monthly income, the correct base for the budget is:
- A. Mean of the last twelve months
- B. Median of the last twelve months
- C. Lower expected value in the plausible range
- D. This month's forecast
Reveal answer
C. Budget against the trough. Excess in strong months smooths the weak ones.
04The primary advantage of the 50/30/20 rule over a detailed budget is:
- A. Higher precision
- B. Lower tax liability
- C. It is coarse enough to be remembered under pressure
- D. It requires no reconciliation
Reveal answer
C. Compliance with a simple rule usually beats non-compliance with a precise one.
05In a zero-based budget, savings should be treated as:
- A. A residual
- B. A category with an assigned amount
- C. Optional if wants exceed 30%
- D. Automatic once the other categories are funded
Reveal answer
B. If savings is a residual, it is the first thing to disappear when a category runs over.
06Envelope budgeting adds friction to discourage overspending in:
- A. Fixed categories like rent
- B. Discretionary categories like dining
- C. Debt service
- D. Tax withholding
Reveal answer
B. Envelopes create a visible constraint on discretionary categories where willpower fails.
07The single most useful reconciliation to perform each month is:
- A. Balance sheet against prior quarter
- B. Category totals against bank-statement change plus savings movement
- C. Net worth against target
- D. Tax withholding against annual estimate
Reveal answer
B. The categorized statement must reconcile to actual account movements; a gap indicates unclassified transactions.
08The correct denominator for the 50/30/20 rule is:
- A. Gross income
- B. Take-home pay after tax and retirement contributions
- C. Net worth
- D. Total household spending
Reveal answer
B. The rule is applied to after-tax, after-retirement-contribution income; the retirement contribution is already savings and should not be double-counted.
A short assessment of comprehension before advancing.