Quiz: Understanding Income, Expenses, and Financial Barriers

What is earned income? *

Income from investments

Income from rental properties

Income from employment, such as salary or wages

Income from freelance or side gigs

Which of the following is an example of unearned income? *

Salary from a full-time job

Dividends from stock investments

Payment for freelance graphic design work

Tips received from a part-time job

What is the difference between gross income and net income? *

Gross income is before taxes and deductions, while net income is after taxes and deductions.

Net income is before taxes and deductions, while gross income is after taxes and deductions

Gross income includes bonuses, and net income does not

Net income only includes earned income, while gross income includes all income

Why is it important to track all sources of income? *

To ensure you're paying the correct amount of taxes

To accurately manage your budget and financial goals

To reduce your overall income for tax purposes

To increase your gross income

What does the net worth formula calculate? *

Total income – total expenses

Total liabilities – total assets

Total income – total liabilities

Total assets – total liabilities

What does a positive net worth indicate? *

Your liabilities exceed your assets

Your expenses are higher than your income

Your assets are greater than your liabilities

Your liabilities and assets are equal

Which of the following is a sign of financial instability? *

Having a positive net worth

Having a budget based on irregular income

Having a negative net worth

Paying off credit card debt before student loans

What is the purpose of conducting a personal financial assessment? *

To compare your financial situation to others

To identify your unique financial challenges and areas for improvement

To calculate your credit score

To reduce your income

How can reviewing your pay stubs regularly help you manage your finances? *

It helps you track your total income over time

It ensures all deductions are correct and that you're receiving the appropriate amount of pay

It gives you a full understanding of your gross income only

It helps you avoid paying taxes

Which of the following is an example of recognizing emotional or psychological barriers to financial stability? *

Using a financial counselor to address financial anxiety

Listing all of your debts

Regularly checking your credit report

Building an emergency fund

If you calculate your net worth and find that it is negative, what should be your next step? *

Ignore the result and continue with your current financial strategy

Start borrowing more to offset the negative net worth

Sell all your assets immediately to pay off liabilities

Identify areas for improvement, such as paying off debt and increasing your savings