finance

Question 1

Explain two reasons why it is important to create a personal budget.

Answer 1

It can give you control over your spending and It can prevent overspending.

Question 2

What is the difference between a credit card and a debit card?

Answer 2

a debit card is linked to your bank account and spends money you already have, while a credit card allows you to borrow money and repay it later.

Question 3

Define the term “interest rate”

Answer 3

the cost of borrowing money, expressed as a percentage of the principal amount borrowed

Question 4

What is the purpose of a credit score?

Answer 4

A credit score is a number that indicates your creditworthiness, reflecting how likely you are to repay debts.

Question 5

What is the difference between fixed and variable expenses?

Answer 5

Fixed expenses are predictable and consistent while variable expenses fluctuate based on factors like usage, demand, or time of year.

Question 6

Identify two types of income a person might receive.

Answer 6

earned income and portfolio income.