17.6 Make a Budget

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What is a budget?

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A budget is a plan that outlines how much money you earn and how you will spend or save it.

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Why is it important to balance a budget?

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Balancing a budget ensures that you do not spend more money than you earn, helping you avoid debt.

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What are fixed expenses?

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Fixed expenses are costs that do not change from month to month, such as rent or mortgage payments.

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What are variable expenses?

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Variable expenses are costs that can change each month, such as groceries or entertainment.

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How do you calculate total income?

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Total income is calculated by adding all sources of income, such as salary, allowances, and any other earnings.

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What is the purpose of saving money?

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Saving money helps you prepare for future expenses, emergencies, and financial goals.

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What percentage of income is commonly recommended for savings?

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It is commonly recommended to save at least 10% of your income.

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How can you track your expenses?

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You can track your expenses by keeping a record of all your purchases and using budgeting apps or spreadsheets.

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What is the 50/30/20 rule in budgeting?

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The 50/30/20 rule suggests allocating 50% of income to needs, 30% to wants, and 20% to savings.

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What is a financial goal?

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A financial goal is a specific objective you want to achieve with your money, such as saving for a vacation or a new bike.