How Much Do You Know about Monthly Budgeting?

Even though the growth of the median US household income keeps outpacing the cost of living, household debt keeps ballooning, according to a NerdWallet study. People are spending more, and they are taking on more revolving debt, like credit card debt.

Debt Increase Graph

People are taking on more and more revolving debt.

The same study established that as of June 2020, the average US household carried $6,124 in credit card debt.

If you feel that your credit card debt is spiraling out of control, you may need professional help. Contact a ClearOne Certified Debt Specialist at 866-481-1597 to learn what debt relief options you have.

You should also start monthly budgeting. Do you have a thorough grasp of how monthly budgeting works? Take this quiz to find out.

Click + next to each question to see the correct answer

Correct Answer: 2. To keep track of your expenses. It's easy to spend more than you think if you are not keeping track of expenses, especially if you use credit cards frequently. But Investopedia notes that if you create and stick to a budget, you'll "know exactly how much money you earn, how much you can afford to spend each month and how much you need to save." That sounds pretty good, right?

Correct Answer: 1. They feel a budget is too restrictive. Though this is a common thought, it is not necessarily a correct one. A well-designed budget can actually help you feel less restricted because you will know exactly where you stand financially, which will help you to make smart decisions. There is freedom in being in control of your finances rather than letting your finances control you.

Correct Answer: 4. As much as you can. In most cases, the interest you are paying on debt is much more than the interest you are earning on savings. While you want to be sure to have sufficient savings to cover emergencies, it makes sense to use as much of your discretionary money as you can to pay down debt. The more you can pay, the more quickly you can get out of debt for good.

Correct Answer: 3. Fixed committed, variable committed, and discretionary. Fixed committed expenses are expenses that are the same every month, such as your mortgage payment or car loan payment. Variable committed expenses are expenses you pay every month that may vary in amount, such as your utility or cell phone bills. Discretionary expenses are non-essential spending and include expenses such as dining out, entertainment costs, and so on.

Correct Answer: 4. All of the above. Paper and pen is the easiest, least expensive, and quickest way to get started on your budget. Microsoft Excel is another excellent choice for those familiar with spreadsheets, as it lets you organize your expenses and does the math for you. We have created an Excel budget template and made it available to you for free. You can also find free web-based software programs that can help with budgeting. Popular solutions include Mint.com, YNAB, and MoneyDance.com.

Correct Answer: 1. Groceries. Groceries are "variable" expenses because you likely do not spend exactly the same amount of money on groceries each month. They are "committed" expenses because they are essential expenses for necessities.

Correct Answer: 4. All of the above. Your bank statement, checkbook, and credit card bills are all great places to look to get a good picture of your total monthly expenses. The more thorough you can be with your budget, the more useful it will be as a tool to help you reach your financial goals.

Correct Answer: 2. Fixed committed expense. Because your mortgage or rent is the same amount each month and is a necessity, it is considered to be a fixed committed expense.

Corret Answer: 2. Fixed committed expense. Fixed committed expenses are necessities, or essential, expenses.

Correct Answer: 3. 20 percent. While the answer varies somewhat depending on how close you are to retirement, as a general rule, most financial planners recommend having the goal of saving 20% of your gross income each month.

Couple Looking Happy While Budgeting

How Much Do You Know About Budgeting?

Your Results:

8-10 correct answers: Congratulations! You probably already have a monthly budget set up. Way to go!

6-7 correct answers: You understand the basics of budgeting, though you are oblivious to some of its finer points. The best way to learn to budget is to actually do it. Draw up a budget today and find out where your money goes.

4-5 correct answers: You are new to budgeting. The fact that you are interested enough in it to have completed this quiz is a plus, however. Educate yourself and take control of your spending. Budgeting should be a part of your credit card relief efforts.

Fewer than 4 correct answers: You are in dire need of budgeting knowledge. Not knowing how you spend your money is probably the reason you may be struggling with credit card debt now. Learn to budget and explore debt relief options.

Regardless of your current budgeting expertise level, input from a Certified Debt Specialist by calling 866-481-1597 can help you better manage credit card debt. Feel free from debt. Get control of your finances today.

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How Much Do You Know About Monthly Budgeting?

Click + next to each question to see the correct answer

What is the purpose of a monthly budget? Why should you start budgeting?1. To keep track of your income 2. To keep track of your expenses 3. To see how much you spend on groceries4. None of the above

What is the main reason people avoid budgeting? 1. They feel a budget is too restrictive 2. They are too busy to do the math 3. They do not want to face the cold, hard numbers 4. They do not understand why they need a budget

How much should you aim to save/set aside for debt repayment every month? 1. At least $1,000 2. $100 3. As little as possible 4. As much as you can

In your monthly budget, into what main categories should you divide your spending?1. Essential and miscellaneous 2. Priority and secondary 3. Fixed committed, variable committed, and discretionary 4. Big and small

What budgeting system can you use to make your calculations easier? 1. Microsoft Excel 2. Online software 3. Paper and pen 4. All of the above

Which of the following constitutes a variable committed expense? 1. Groceries2. Electricity 3. Mortgage or rent 4. Phone

In order to include every single monthly expense that you incur in your budget, you should: 1. Review your online banking statement 2. Review your checkbook 3. Review your credit card bills 4. All of the above

Your mortgage/rent constitutes a: 1. Variable committed expense2. Fixed committed expense3. Discretionary expense 4. All of the above

The term “essential expense” is the equivalent of: 1. Discretionary expense 2. Fixed committed expense 3. Variable committed expense 4. Medical expense

Your goal with your monthly budget is to save what percent of your income? 1. 5 percent 2. 50 percent 3. 20 percent 4. 15 percent

How Much Do You Know About Budgeting?

Your Results:

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