2.1: Part #1

What is the purpose of creating a financial plan?

• To increase discretionary expenses

• To manage personal finances throughout life span

• To achieve short-term goals only

• To avoid financial problems

What is the first step in developing a financial plan?

• Paying off debts

• Investing in stocks

• Creating a budget

• Opening a savings account

What is the nature of financial planning?

• Investing in real estate

• Paying off loans

• Development of a strategy to meet financial needs over a lifetime

• Short-term money management

What is a fixed expense?

• A set amount that must be paid each budget period

• A cost that changes in amount and time

• An expense that is necessary for survival

• An amount spent for an item that a person could do without

What is a variable expense?

• An amount spent for an item that a person could do without

• A cost that changes in amount and time

• A set amount that must be paid each budget period

• An expense that is necessary for survival

What is the benefit of including savings as a fixed expense in your budget?

• To have cash available for unexpected emergencies

• To increase discretionary expenses

• To spend on luxury items

• To donate to charity

What is the term for the time between birth and death?

• Savings period

• Income period

• Budget period

• Life span

What is the purpose of a charity?

• To avoid tax deductions

• To fulfill social responsibility

• To increase personal wealth

• To aid those in need

What is the process of studying data with the goal of discovering new information that can help with making decisions?

• Data retrieval

• Data storage

• Data entry

• Data analysis

What is the benefit of making charitable contributions?

• Feeling stressed

• Avoiding social responsibility

• Increase in personal wealth

• Tax deduction on income tax return