Budgeting Basics

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What is a personal budget?

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A personal budget is a financial plan that helps individuals track their income and expenses.

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What is the difference between needs and wants?

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Needs are essential for survival, while wants are desires that are not necessary for survival.

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Why is it important to set financial goals?

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To prioritize spending, save money, and work towards desired financial future.

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What are some common financial goals? Options: Investing in stocks, starting a business, buying a luxury car, taking extravagant vacations; Spending all income on immediate wants and needs, not saving any money; Borrowing money to fund a lavish lifestyle.

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Saving for retirement, paying off debt, buying a home, saving for education, and building an emergency fund.

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What is a monthly budget?

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A plan to track income and expenses for approximately 30 days.

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How can you differentiate between fixed and variable expenses?

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Fixed expenses are recurring costs that remain the same each month, while variable expenses can change from month to month.

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What can you do if you have extra money in your budget? Options: Skip a bill, reduce your clothing budget, add it to another category like savings.

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add it to another category like savings.

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Why is it important to have an emergency fund?

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To provide a financial safety net for unexpected expenses or emergencies.

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What are some ways to save money on a tight budget?

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Creating a budget and sticking to it, cutting unnecessary expenses, finding cheaper alternatives, saving on utilities, and reducing debt.

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What is the 50/30/20 rule of budgeting?

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A guideline for allocating income into needs, wants, and savings/debt repayment.