Financial Health and Budgeting Quiz

Grade 12 · Health · Quiz

Challenge your understanding of budgeting strategies, debt management, savings principles, and long-term financial planning.

Questions

  1. If you earn $3,500 per month after taxes and follow the 50/30/20 rule strictly, how much should go toward savings and debt repayment each month?

    1. $350
    2. $700
    3. $1,050
    4. $1,750
    Show answer

    Answer: $700

    $3,500 × 20% = $700. The 20% category covers both savings goals (emergency fund, retirement) and debt repayment beyond minimums.

  2. You have two debts: Credit Card A at 24% APR with a $500 balance, and Credit Card B at 16% APR with a $2,000 balance. The debt avalanche method says to pay which one first?

    1. Credit Card B because it has the larger balance
    2. Credit Card A because it has the higher interest rate
    3. Both equally each month
    4. Whichever has the lower minimum payment
    Show answer

    Answer: Credit Card A because it has the higher interest rate

    The avalanche method targets the highest APR regardless of balance size; paying 24% APR first saves more money in total interest than tackling the larger lower-rate balance.

  3. Which of the following actions has the GREATEST positive impact on a FICO credit score?

    1. Closing old credit card accounts
    2. Making all payments on time consistently
    3. Applying for multiple new credit cards in one month
    4. Carrying a small balance on credit cards each month
    Show answer

    Answer: Making all payments on time consistently

    Payment history is the single largest factor in FICO scoring at 35%; consistent on-time payments build a strong credit profile faster than any other action.

  4. An employer offers a 401(k) match of 100% up to 3% of salary. If an employee earning $50,000 contributes 3%, how much total goes into the 401(k) annually?

    1. $750
    2. $1,500
    3. $3,000
    4. $4,500
    Show answer

    Answer: $3,000

    The employee contributes $50,000 × 3% = $1,500. The employer matches 100% of that, adding another $1,500, for a combined annual contribution of $3,000.

  5. The 'Rule of 72' in personal finance is used to:

    1. Calculate monthly loan payments
    2. Estimate how many years it takes to double money at a given interest rate
    3. Determine the maximum safe withdrawal rate in retirement
    4. Set the upper limit for credit card utilization
    Show answer

    Answer: Estimate how many years it takes to double money at a given interest rate

    Divide 72 by the annual interest rate to estimate doubling time. At 6% return, money doubles in roughly 12 years (72 ÷ 6 = 12).

  6. Which type of expense is BEST described as a 'want' in the 50/30/20 framework?

    1. Rent
    2. Grocery staples
    3. Streaming subscriptions
    4. Health insurance premium
    Show answer

    Answer: Streaming subscriptions

    Streaming services are discretionary — you can live without them. Rent, groceries, and insurance premiums are essential needs in the 50% category.

  7. A high credit utilization ratio (using more than 30% of available credit) generally lowers a person's credit score.

    Show answer

    Answer: True

    Credit bureaus recommend keeping utilization below 30%; high utilization signals financial stress and reduces the Amounts Owed component of a FICO score.

  8. Investing in an S&P 500 ______ fund is widely recommended for new investors because it provides instant diversification across 500 large U.S. companies at a low cost.

    Show answer

    Answer: index

    Index funds passively track a market index, providing broad diversification with minimal fees — historically outperforming most actively managed funds over the long term.

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