Balanced Budget

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What is a balanced budget?

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A balanced budget is when a person's income equals their expenses, meaning they do not spend more money than they earn.

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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 a car payment or rent.

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What is income?

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Income is the money earned from work or investments, such as wages from a job or profits from selling goods.

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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 a surplus in budgeting?

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A surplus occurs when income exceeds expenses, allowing for savings or extra spending.

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What is a deficit in budgeting?

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A deficit occurs when expenses exceed income, leading to borrowing or debt.

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How can one avoid being overdrawn at the bank?

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To avoid being overdrawn, one can create a budget, track spending, and reduce unnecessary expenses.

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What is the purpose of creating a budget?

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The purpose of creating a budget is to plan and manage finances, ensuring that spending does not exceed income.

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What is an example of a discretionary expense?

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An example of a discretionary expense is spending on entertainment, such as going to the movies or dining out.

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What does it mean to track expenses?

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Tracking expenses means keeping a record of all money spent to understand spending habits and manage a budget.