NAB Personal Finance Planning 2

Question 1

The 50/30/20 budgeting rule allocates 20% of after-tax income to which category?

Accepted Answer

Savings and debt repayment

Answer

Wants and discretionary spending

Answer

Essential needs like housing

Answer

Entertainment and dining

Question 2

Which debt repayment strategy pays off the smallest balance first regardless of interest rate?

Accepted Answer

Debt snowball

Answer

Debt avalanche

Answer

Debt consolidation

Answer

Balance transfer method

Question 3

A person earns $5,000/month and spends $4,800. What is their monthly savings rate?

Accepted Answer

4%

Answer

96%

Answer

20%

Answer

24%

Question 4

Which of the following is considered a 'needs' expense under the 50/30/20 budget framework?

Accepted Answer

Minimum loan payments

Answer

Streaming subscriptions

Answer

Gym membership

Answer

Vacation fund contributions

Question 5

What is the primary purpose of an emergency fund in a personal financial plan?

Accepted Answer

To cover unexpected expenses without incurring debt

Answer

To fund luxury purchases

Answer

To maximize investment returns

Answer

To pay regular monthly bills

Question 6

If someone has $3,000 in monthly expenses, what is the minimum recommended emergency fund?

Accepted Answer

$9,000

Answer

$3,000

Answer

$6,000

Answer

$18,000

Question 7

Which type of account is best suited for holding an emergency fund?

Accepted Answer

High-yield savings account

Answer

Stock market index fund

Answer

Certificate of deposit with early withdrawal penalty

Answer

Cryptocurrency wallet