Multiple Choice
Which of the following are two questions that smart spenders typically ask before making a purchase?
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1. Introduction to Accounting
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When using the 50-30-20 rule to budget, what percentage of your income should be allocated to needs?
A
30%
B
20%
C
40%
D
50%
Verified step by step guidance1
Understand the 50-30-20 rule: This budgeting rule divides your income into three categories: 50% for needs, 30% for wants, and 20% for savings or debt repayment.
Define 'needs': Needs are essential expenses required for basic living, such as housing, utilities, groceries, transportation, and insurance.
Identify the percentage allocated to needs: According to the 50-30-20 rule, 50% of your income should be allocated to needs.
Compare the given options: Review the provided percentages (30%, 20%, 40%, and 50%) and match them to the correct allocation for needs.
Conclude that the correct answer is 50%, as it aligns with the rule's allocation for essential expenses.
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