Personal Budget

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What is a personal budget?

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A personal budget is a plan that outlines an individual's expected income and expenses over a specific period, helping to manage finances effectively.

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What is a fixed expense?

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A fixed expense is a cost that does not change from month to month, such as rent or a car payment.

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What is a variable expense?

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A variable expense is a cost that can change from month to month, such as groceries or entertainment.

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How do you calculate the percentage of income spent on an expense?

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To calculate the percentage of income spent on an expense, divide the expense amount by the total income and multiply by 100.

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What is the formula to calculate savings?

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Savings = Income - Expenses.

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What is the importance of saving for retirement?

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Saving for retirement is important to ensure financial security and independence in later years when income may be reduced.

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What is the difference between gross pay and take-home pay?

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Gross pay is the total earnings before deductions, while take-home pay is the amount received after deductions like taxes and retirement contributions.

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What is an example of a discretionary expense?

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An example of a discretionary expense is dining out or buying new clothes, which are not essential.

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What does it mean to live within your means?

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Living within your means means spending less than or equal to your income to avoid debt.

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How can budgeting help in financial planning?

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Budgeting helps in financial planning by providing a clear overview of income and expenses, allowing for better decision-making and goal setting.