Mastering Your Personal Budget

What is the first step in creating a personal budget?

• Assess your income and expenses.

• Create a savings account

• Cut all discretionary spending

• Invest in stocks

Why is it important to track monthly expenses?

• It is important to track monthly expenses to manage finances effectively and identify opportunities for savings.

• To simplify budgeting processes.

• To avoid tracking financial goals.

• To increase monthly spending limits.

What are some common sources of income for students?

• Investments in stocks

• Selling homemade crafts

• Part-time jobs, internships, freelance work, tutoring, scholarships or grants.

• Real estate rentals

How can saving money help you achieve future goals?

• You can achieve goals without any financial planning.

• Saving money is only useful for emergencies.

• Saving money is irrelevant to personal development.

• Saving money helps you achieve future goals by providing the necessary funds to invest in those goals.

What is a good rule of thumb for saving a portion of your income?

• Invest all your income instead of saving.

• Save at least 20% of your income.

• Save 5% of your income.

• Spend 30% of your income on luxury items.

What is the purpose of a budget?

• The purpose of a budget is to manage finances by planning income and expenses.

• To avoid tracking financial activities.

• To ensure all expenses are spontaneous.

• To increase spending without limits.

How can you categorize your expenses?

• Categorize expenses by color and size.

• Categorize expenses into fixed, variable, discretionary, and periodic.

• Sort expenses into categories of likes and dislikes.

• Group expenses based on the day of the week.

What is a fixed expense? Give an example.

• Groceries

• An example of a fixed expense is rent.

• Utilities bill

• Car insurance

What is a variable expense? Give an example.

• A fixed expense like rent that remains constant each month.

• An example of a variable expense is a utility bill, such as electricity or water, which can vary based on usage.

• A one-time purchase such as a new car.

• An expense that is always the same regardless of usage.

How can you effectively manage debt?

• Ignore all debts and hope they go away

• Invest in high-risk stocks to pay off debt

• Create a budget, prioritize high-interest debts, consolidate if possible, make consistent payments, and avoid new debt.

• Take out more loans to cover existing debts