Whether it’s a house, a car, or a new TV, a person will be able to determine whether or not a certain purchase will fit within their monetary constraints. Another great benefit is that a budget portrays an accurate idea of how much an individual can actually afford to pay for various consumer items. There are many methods available on how to categorize the expenses, which categories should have higher allocation, and many other considerations which should make people finally understand that they don’t have much money to cover all expenses. If a person only has $100 left for buying a fast food. A budget will help prevent this from happening by making a person accountable for the money that they spend. How many times have you taken money from the ATM only to realize a couple of days later that it is gone? Many times it is difficult to remember how exactly you spent the money, and often times this money is wasted on unnecessary purchases. Many people have no idea exactly where or how they spend a good portion of their money. A good budget will consider all the factors above and still have some savings on income by the end of month. Flexible expenses are usually related with variable amount of money that has to be expensed based on people behaviour. For example: mortgage, school fee, cable tv etc. Fixed expenses are usually related with the same amount of money that has to be expensed because of obligation. The limitation should be based the amount of income being received, fixed and flexible expenses. One tool to help people manage their expenses is a personal budget.Ī personal budget is a financial plan which sets limits on the amount of money that will be spent on any expenses category in any period of time. In order to reverse this trend, people need to become more responsible with their spending patterns.
Because people tends to spend their money as soon as they get paid and think about saving it several days before getting paid again. That is the reason why every last week in every month we saw any marts, restaurants, stores are more quiet comparing with previous weeks. Some people just don’t know how to make it, others are don’t have intention on limiting their expenses. At this point of time, there are very few people who understand the needs of budgeting their daily expenses.
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