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“Oh no! Another bill to pay! – how can I count my expenditures”

Budget – What is it?

,,A budget is telling your money where to go instead of wondering where it went

Dave Ramsey

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A HOUSEHOLD BUDGET is a statement of income and expenditure for a given period, so it contains information about your financial situation. Efficient budgeting should include both the planning and recording of expenditure, in order to record finances.

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BENEFITS OF PREPARING A BUDGET

If you conscientiously draw up your budget plan, then:

  • you have full knowledge and control over your finances,
  • you can see what it is worth saving and what it is not,
  • you can more easily identify unnecessary expenses for other needs/dreams,
  • you learn to plan your expenses,
  • by analysing your expenses you will learn a lot about your needs.

BASIC FINANCIAL TERMS

INCOME – the sum of all the money you have at your disposal (in net value) in a given month: you can include your salary under the employment contract (in various forms and jobs), pension, alimony, money from renting a flat to someone, allowances and other benefits.

EXPENDITURES – spending money in various forms: paying for the product/service by cash, card (debit or credit) or by bank transfer.

FIXED EXPENDITURES – expenses whose value is fixed every month, e.g. apartment rent, credit installment, telephone bill, Internet bill

VARIABLE EXPENDITURES – expenses whose value in each month is different, e.g: expenditure on food, chemicals, entertainment: cinema, theatre, clothes, etc.

SAVINGS – money that has not been spent on consumption at the time

BUDGET SURPLUS – if your income fully covers your expenses for the month and you have savings.

BUDGET DEFICIT – if your expenses in a given month are greater than your income.