Understanding Personal Finance Basics

Benjamin has a monthly budget and notices that his rent is an example of _________ expenses, as it stays the same every month.

• fixed

• discretionary

• variable

• intermittent

Answer explanation

Expenses that remain constant each month, like rent, are called fixed expenses. Unlike variable expenses, which fluctuate, fixed expenses provide stability in budgeting.

Tags

TEKS.MATH.7.13B

• Principal

• Interest

• Time

• Percent Rate

Answer explanation

In the simple interest formula I = Prt, the variable t represents Time. It indicates the duration for which the principal amount is invested or borrowed, making it a crucial component in calculating interest.

Tags

TEKS.MATH.7.13E

Grace is considering opening a savings account that offers 2.5% simple interest. If she deposits $5,000, how much interest will she earn in three years?

• $5375

• $375

• $37500

• $42500

Answer explanation

To calculate simple interest, use the formula: Interest = Principal x Rate x Time. Here, Interest = $5000 x 0.025 x 3 = $375. Thus, the correct answer is $375.

Tags

TEKS.MATH.7.13E

Grace is budgeting her monthly expenses. She notices that her rent is an expense that does not change from month to month. This type of expense is called ...

• variable expense

• profit

• fixed expense

Answer explanation

A fixed expense is a cost that remains constant each month, unlike a variable expense, which fluctuates. Examples of fixed expenses include rent and insurance, making 'fixed expense' the correct answer.

Arjun has $3200 per month to spend. His monthly costs include: rent of $1,200, car expenses of $525, utilities of $145, insurance of $200, food for $315, and other expenses of $75. What is the end result?

• Budget surplus of $740

• Budget deficit of $740

• Budget surplus of $125

• Budget deficit of $125

Answer explanation

Bailey's total monthly expenses are $1,200 + $525 + $145 + $200 + $315 + $75 = $2,560. Subtracting this from her income of $3,200 gives $3,200 - $2,560 = $640. Therefore, she has a budget surplus of $640.

Tags

CCSS.7.EE.B.3

CCSS.7.NS.A.1

CCSS.7.NS.A.3

Hannah makes $40,000 and pays 25% in taxes. She wants to spend no more than 28% on rent. What can she afford

• $400

• $25

• $700

• $1000

Answer explanation

Jose's after-tax income is $30,000 (75% of $40,000). Spending 28% on rent means he can afford $8,400 annually, which is $700 monthly. Thus, the correct answer is $700.

Mr. Martin wanted to save money to take his family on a vacation. Which plan below saves him the most amount of money?

• $80 a month for 6 months

• $3 a day for 180 days

• $70 a month for 9 months

• $5 a day for 125 days

Answer explanation

To find the best savings plan, calculate the total for each option. $70 a month for 9 months totals $630, while the others yield less: $480, $540, and $625 respectively. Thus, $70 a month for 9 months saves the most.

Elijah is planning his monthly budget. Which of the following is an example of a variable expense?

• Rent

• Groceries

• Insurance

• Mortgage

Noah decides to invest $2,000 at a simple interest rate of 3% per annum. How much interest will Noah earn in 5 years?

• $300

• $200

• $150

• $100

Olivia is reviewing her monthly budget. Which of the following is considered a discretionary expense?

• Utility bills

• Dining out

• Car payment

• Health insurance