Budgeting Basics

What is a personal budget?

• A personal budget is a document that outlines an individual's financial goals.

• A personal budget is a type of loan that individuals can take to cover their expenses.

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

• A personal budget is a tool used by businesses to manage their finances.

What is the difference between needs and wants?

• Needs are material possessions, while wants are intangible desires.

• Needs and wants are the same thing.

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

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

Why is it important to set financial goals?

• To waste money, live paycheck to paycheck, and have no financial security.

• To rely on others for financial support, accumulate debt, and have no control over your finances.

• To spend impulsively, have no savings, and struggle to achieve financial goals.

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

What are some common financial goals?

• 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

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

• Borrowing money to fund a lavish lifestyle

What is a budget plan?

• A budget plan is a detailed outline of an individual or organization's income and expenses over a specific period of time.

• A budget plan is a document that tracks daily expenses.

• A budget plan is a list of financial goals.

• A budget plan is a tool used to calculate taxes.

What are the steps involved in creating a budget plan?

• Determine income, track expenses, set goals, create template, allocate funds, monitor and adjust

• Create template, determine income, track expenses, set goals, allocate funds, monitor and adjust

• Determine expenses, track income, set goals, create template, allocate funds, monitor and adjust

• Allocate funds, determine income, track expenses, set goals, create template, monitor and adjust

How can you differentiate between fixed and variable expenses?

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

• Fixed expenses are costs that are incurred daily, while variable expenses are incurred monthly.

• Fixed expenses are costs that are paid in one lump sum, while variable expenses are paid in installments.

• Fixed expenses are costs that are tax deductible, while variable expenses are not.

What are some strategies for managing debt?

• Ignoring debt and hoping it will go away

• Taking on more debt to pay off existing debt

• Avoiding communication with creditors

• Creating a budget, prioritizing debt payments, negotiating with creditors, consolidating debt, seeking professional help if needed

Why is it important to have an emergency fund?

• To rely on credit cards for emergencies.

• To waste money on unnecessary expenses.

• To have more money for vacations and luxury items.

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

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

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

• Eating out at expensive restaurants, buying designer clothes, and going on lavish vacations.

• Taking out loans and using credit cards to make purchases.

• Not tracking expenses and overspending on unnecessary items.