Budget basics

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What is a budget?

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A budget is a plan for managing your money. It compares how much you earn (make) to how much you spend.

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True or False: A budget helps you save money for the things you really want.

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True

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True or False: A budget is not a helpful tool.

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False

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What does income refer to?

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Income is all the money you earn (make) over a period of time, usually a month.

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What is the purpose of creating a budget?

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The purpose of creating a budget is to manage your finances effectively by tracking income and expenses.

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What are fixed expenses?

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Fixed expenses are costs that do not change from month to month, such as rent or mortgage payments.

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What are variable expenses?

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Variable expenses are costs that can change from month to month, such as groceries or entertainment.

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What is the difference between needs and wants?

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Needs are essential items required for survival (like food and shelter), while wants are non-essential items that enhance quality of life.

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How can a budget help in achieving financial goals?

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A budget helps prioritize spending and saving, making it easier to reach financial goals like saving for a car or college.

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What is discretionary spending?

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Discretionary spending refers to non-essential expenses that can be adjusted or eliminated, such as dining out or luxury items.