DOL 11/13/24

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What is a budget?

Back

A budget is a financial plan that outlines expected income and expenses over a specific period, helping individuals manage their finances.

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What does it mean to balance a budget?

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Balancing a budget means ensuring that total income equals total expenses, preventing overspending.

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What are common categories of expenses in a personal budget?

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Common categories include housing, utilities, food, transportation, entertainment, savings, and debt repayment.

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How can decreasing expenses help in balancing a budget?

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Decreasing expenses reduces the total amount spent, which can help align spending with income and achieve a balanced budget.

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What is the importance of tracking income and expenses?

Back

Tracking income and expenses helps individuals understand their financial situation, identify spending patterns, and make informed budgeting decisions.

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What actions can be taken to increase income?

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Actions to increase income include seeking a raise, taking on a second job, freelancing, or selling unused items.

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What is the role of savings in a budget?

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Savings provide a financial cushion for emergencies, future expenses, and long-term goals, and should be included in a budget.

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What is discretionary spending?

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Discretionary spending refers to non-essential expenses that can be adjusted or eliminated, such as entertainment and dining out.

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How can one identify areas to cut back on spending?

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Reviewing past spending habits, categorizing expenses, and identifying non-essential items can help pinpoint areas to cut back.

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What is the difference between fixed and variable expenses?

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Fixed expenses remain constant each month (e.g., rent), while variable expenses can fluctuate (e.g., groceries, entertainment).