Introduction to Budgeting

Show your work for each problem.

1.
What is a budget?
1. a)Money you borrow from others
2. b)A plan for spending and saving money
3. c)A type of bank account
4. d)A list of things you want to buy
Answer: A plan for spending and saving money
A budget is a plan that shows how you will spend and save your money over a period of time, usually a month.
2.
Which of these is an example of income?
1. a)Paying for a bus ride
2. b)Buying a movie ticket
3. c)Receiving allowance from parents
4. d)Spending money on snacks
Answer: Receiving allowance from parents
Receiving allowance is income because it's money coming to you. The other options are all expenses (money going out).
3.
Sarah has 100 euros. She spends 60 euros and saves the rest. How many euros does she save?
Answer: 40
euros. Sarah saves 40 euros after spending 60 euros.
4.
Alex's monthly income is 80 euros. His expenses are 50 euros and his savings are 25 euros. What is his balance? (Enter a positive or negative number)
Answer: 5
euros. Alex has a 5 euro surplus (budget overage).
5.
What does it mean if you have a budget deficit?
1. a)You have extra money left over
2. b)You're saving too much money
3. c)Your budget is perfectly balanced
4. d)You're spending more than you earn
Answer: You're spending more than you earn
A budget deficit means your expenses exceed your income - you're spending more money than you have coming in.
6.
Using the 50/30/20 rule, how much should someone with 400 euros monthly income spend on needs (50%)?
Answer: 200
euros. Half of the income goes to needs.
7.
Lisa earns 250 euros monthly. She wants to save 20%. How many euros should she save each month?
Answer: 50
euros. Lisa should save 50 euros each month to reach her 20% savings goal.
8.
Which is an example of a fixed expense?
1. a)Monthly phone bill of 30 euros
2. b)Going to the cinema
3. c)Buying new clothes
4. d)Buying snacks at school
Answer: Monthly phone bill of 30 euros
A phone bill is a fixed expense because it's the same amount every month. Snacks, cinema, and clothes are variable expenses that change based on choices.
9.
Marco has 300 euros monthly income. He plans: Needs 150 euros, Wants 100 euros, Savings 80 euros. Does his budget balance? If not, what's the deficit or surplus?
Answer: -30
1. Add up all planned spending and saving: 150 + 100 + 80 = ? 330
2. Compare to income: Is 330 more or less than 300? more
3. Calculate the difference: 300 - 330 = ? -30
10.
Apply the 50/30/20 rule to a 600 euro monthly income. Calculate the amount for each category.
Answer: 300, 180, 120
1. Calculate 50% for needs: 600 x 0.50 = ? 300
2. Calculate 30% for wants: 600 x 0.30 = ? 180
3. Calculate 20% for savings: 600 x 0.20 = ? 120
4. Verify: 300 + 180 + 120 = ? 600
11.
If you save 15 euros every week, how much will you have saved after 8 weeks?
Answer: 120
euros. Consistent weekly saving adds up over time!
12.
Emma's budget is: Income 400 euros, Needs 200 euros, Wants 120 euros, Savings 80 euros. Her phone breaks and costs 100 euros to fix. How should she adjust her budget this month?
Answer: 80, 20
1. How much flexible money is available (Wants + Savings)? 200
2. Is 200 euros enough to cover the 100 euro repair? yes
3. If she uses all savings (80 euros), how much more does she need? 20
4. New Wants amount after reducing by 20 euros? 100
13.
A family spends 35% of their income on housing. If they earn 2,800 euros monthly, how much do they spend on housing?
Answer: 980
euros. Housing costs represent over a third of this family's budget.
14.
Carlos wants to save 75 euros for a new game. He can save 12 euros per week. How many weeks will it take, and how much extra will he have?
Answer: 7 weeks, 9 euros extra
1. Divide goal by weekly savings: 75 / 12 = ? 6.25
2. Round UP to the next whole number of weeks: 7
3. Calculate total saved in 7 weeks: 12 x 7 = ? 84
4. Calculate extra money: 84 - 75 = ? 9
15.
Which is the best strategy when you get a raise (earn more money)?
1. a)Stop budgeting since you have more money
2. b)Keep expenses the same and increase savings
3. c)Spend all the extra on entertainment
4. d)Immediately increase spending on wants
Answer: Keep expenses the same and increase savings
The smartest strategy is to keep expenses the same and save the extra money. This avoids 'lifestyle inflation' where your spending grows to match your income, leaving no extra savings.
16.
Sophie earns 500 euros monthly. She spends 40% on needs, 35% on wants, and saves the rest. How much does she save, and what percentage is that?
Answer: 125, 25%
1. Calculate total percentage spent: 40% + 35% = ? 75
2. Calculate savings percentage: 100% - 75% = ? 25
3. Calculate savings amount: 500 x 0.25 = ? 125