Midterm module 3

Question 1

A financial plan that shows how a person, family, or organization manages their
income and expenses over a certain period of time.

It serves as a guide to ensure money is spent wisely, priorities are addressed, and future needs are prepared for.

Answer 1

Budget

Question 2

Involves planning for Needs, Wants, and Savings

Answer 2

Budgeting

Question 3

The essential expenses like food, shelter, transportation, education, and health.

Answer 3

Needs

Question 4

The non-essential but desirable items like gadgets, travel, and entertainment.

Answer 4

Wants

Question 5

Budgeting that results to negative outcomes.

Answer 5

Poor budgeting

Question 6

What negative outcomes can poor budgeting result to? (3)

Answer 6

• Debt
• Stress and limit financial freedom
• Financial instability

Question 7

Refers to borrowing money to cover expenses.

Answer 7

Debt

Question 8

A situation where expenses are greater than income.

Answer 8

Financial instability

Question 9

Budgeting that results to positive outcomes.

Answer 9

Good budgeting

Question 10

What positive outcomes can good budgeting result to? (3)

Answer 10

• Control over personal finances
• Encourages savings and investments
• Financial stability and peace of mind

Question 11

Money received regularly or occasionally.

Answer 11

Income

Question 12

Sources of income (4)

Answer 12

• Salary
• Allowance
• Business profit
• Side hustles or part-time jobs

Question 13

Money spent to pay for goods and services.

Answer 13

Expenses

Question 14

2 types of expenses.

Answer 14

1. Fixed expenses
2. Variable expenses

Question 15

Predictable, regular payments such as rent, tuition fees, insurance, and utility bills.

Answer 15

Fixed expenses

Question 16

Flexible, changeable spending such as food, transportation, clothing, leisure, and entertainment.

Answer 16

Variable expenses

Question 17

Money set aside for future needs, emergencies, or investments.

Answer 17

Savings

Question 18

Concepts in budgeting (3)

Answer 18

1. Income
2. Expenses
3. Savings

Question 19

Basic budgeting equation

Answer 19

Income = Expenses + Savings

Question 20

Other formulas for budgeting equation

Answer 20

Savings = Income – Expenses
Expenses = Income – Savings

Question 21

3 budgeting techniques

Answer 21

1. 50/30/20 Rule
2. Envelope system
3. Zero-based budgeting

Question 22

Meaning of 50/30/20 Rule

Answer 22

50% for Needs
30% for Wants
20% for Savings & Debt Repayment

Question 23

This method is best for beginners who want a balanced way to spend and save.

Answer 23

50/30/20 Rule

Question 24

A cash-based budgeting method where money is divided into envelopes, each labeled
with a spending category

This technique helps control overspending and is effective for people who tend to overspend with cards or online transactions.

Answer 24

Envelope System

Question 25

A system where every peso is assigned to a specific category (expenses, savings, debt, or investments). This method encourages discipline and ensures no money is wasted, but it requires careful tracking of expenses.

Answer 25

Zero-Based Budgeting