Budgeting | Practical Money Skills

Budgeting

Although four out of five Americans use a budget to plan their spending, 20 percent of them keep only a mental budget. Putting your budget on paper or in a basic spreadsheet is essential if you want a healthy financial future. Creating a detailed budget is key to managing your finances. An accurate monthly budget can help you reach your financial goals, whether you’re saving for a car, buying a home or paying off student loans. By sticking to a budget, you can save thousands of dollars each year and avoid overspending. 

Budgeting may sound complicated, but it can actually be a very basic personal finance skill. Whether you decide to make your budget bare bones or detailed to the last dollar, the most important part of budgeting is to put it into practice. Tracking your spending is essential to managing your budget. 

First, let’s test your budgeting knowledge.

line segement
Quick Quiz

Challenge yourself with this short quiz to test your budgeting know-how and sharpen your skills. Whether you’re already a budgeting expert or a beginner with room to improve, take the quiz to find out how to manage money better.

1
What is the purpose of a personal budget?
a
Make a plan to organize and manage your money
b
Figure out how much you have saved for emergencies
C
Guarantee you earn more
D
List all of your investments
Correct!

The purpose of a personal budget is to make a plan to organize and manage your money based on how much you earn and spend.

Not quite.

The purpose of a personal budget is to make a plan to organize and manage your money based on how much you earn and spend.

2
What is an example of a flexible expense?
A
Rent payment
B
Internet bill
C
Groceries
D
Subscription fees
Correct!

Groceries are a flexible expense and can vary month to month.

Not quite.

Groceries are a flexible expense and can vary month to month.

3
What kind of expense is a rent payment?
A
Flexible expense
B
Unfixed expense
C
Fixed expense
D
Preliminary expense
Correct!

A rent payment is a fixed expense because it is based on a particular rate and is due each month.

Not quite.

Your rent payments are based on a particular rate and are due each month.

4
Disposable income is
A
Endless money at your disposal
B
Your income minus your income taxes
C
Your income divided by your expenses
D
Money you put toward an emergency fund
Correct!

Your disposable income is the money you have left over for saving and spending after you subtract your income taxes.

Not quite.

Your disposable income is the money you have left over for saving and spending after you subtract your income taxes. Your disposable income is the money you have left over for saving and spending after you subtract your income taxes.

5
What is the first step in creating a monthly budget?
A
Determine your average monthly income and expenses
B
Invest extra funds
C
Divide your income by your expenses
D
Open a new deposit account
Correct!

Determining your average monthly net income and expenses is the first step in creating a new monthly budget.

Not quite.

The first step in creating a new monthly budget is to determine your average monthly income and expenses.

Your Score

Nice job!

You’re a big-league budgeter — check out these tips to stay successful.

Nice job!

You’re on the path to becoming a big-league budgeter — check out these resources to become even better at budgeting.

Too Bad!

You’re a newbie with lots of budgeting potential — check out these resources to become a great budgeter.

Back to Results
Test Your Budgeting Knowledge

5Questions

Share

Featured

a man fixing car tyre and his family sitting in the car a man fixing car tyre and his family sitting in the car a man fixing car tyre and his family sitting in the car
Calculators
Emergency Fund

Do you have enough money to cover an emergency? Evaluate your finances to determine how much you should be saving for the unexpected.

Calculate Now
bar graph and a calculator image bar graph and a calculator image bar graph and a calculator image
Learn
Creating a Budget

Learn how to create a budget that meets your financial goals and maximizes your money.

Learn More
man sitting on couch holding a calculator man sitting on couch holding a calculator man sitting on couch holding a calculator
Calculators
Rework Your Budget

As your finances change, it's important to adjust your budget. Track your current expenses and make adjustments as necessary.

Calculate Now
lunch tracker banner having fork and knife logo on it lunch tracker banner having fork and knife logo on it lunch tracker banner having fork and knife logo on it
Apps
Lunch Tracker

What are you spending on lunch? Calculate your spending, learn cost-cutting tips and save money.

Learn More