Creating a Personal Budget

What is the first step in setting up a monthly budget?

• Calculate your income

• List your expenses

• Track your expenses

• Categorize your expenses

What should you do if your expenses exceed your income?

• Increase your income

• Adjust your budget lines and reduce nonessential expenses

• Add more to your emergency fund

• Ignore the difference

Which of the following is considered a non-essential expense?

• Utilities

• Food

• Concert tickets

• Shelter

What is the purpose of categorizing expenses in a budget?

• To increase income

• To plan and track spending more effectively

• To reduce income tax

• To eliminate all non-essential expenses

What is a benefit of creating an annual budget?

• It helps set financial goals and track spending over the year

• It ensures you have more expenses than income

• It helps you spend more money

• It eliminates the need for a monthly budget

What is the 50-30-20 spending plan mentioned in the text?

• A plan to spend 50% on needs, 30% on wants, and 20% on savings

• A plan to spend 50% on wants, 30% on needs, and 20% on savings

• A plan to spend 50% on savings, 30% on needs, and 20% on wants

• A plan to spend 50% on needs, 30% on savings, and 20% on wants

What should you do with leftover money after listing all expenses?

• Use it to pay off debt

• Ignore it

• Add more to your emergency fund or savings goals

• Spend it on non-essential items