Budget – What is it?
Contents
,,A budget is telling your money where to go instead of wondering where it went”
Dave Ramsey
Source: https://www.pexels.com/photo/calculate-calculator-close-up-magnifying-glass-221174/
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.
Sources: https://unsplash.com/photos/GtQK4TraPV0; https://www.pexels.com/photo/person-holding-black-ceramic-pig-coin-bank-3943723/; https://www.pexels.com/photo/photo-of-person-handing-card-2988232/
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.