What is a budget?

What is a Budget?

A **budget **is a great tool to manage your finances. It consists of your funds for wants and needs and those you can set aside for savings or other purposes. A budget is key to helping you avoid overspending or going into debt.

Why Do I Need a Budget?

You only have a certain, limited amount of money. Therefore, you must decide what to spend it on as you can’t buy everything. A budget helps you prioritize your spending on what matters most!

Track Your Income and Expenses

The money you receive from various sources, such as allowance, gifts, or work, is your income. On the other hand, money you spend on various items such as food, clothing, bills, or entertainment is referred to as your expenses. A budget helps you keep track of your income and expenses.

Set and Achieve Your Goals

We all have things that require us to set aside money, such as a vacation, college fund, or that new video game. A budget will help you calculate how much money you need to set aside for your goals and how long you need to save up. Furthermore, it will assist you in changing your spending patterns to increase your savings for your objectives.

Avoid or Reduce Debt

Debt is the money you owe to a friend, bank, or store. Debt can cause problems because it raises your interest and fee costs and lowers your credit. By keeping track of the sources and amounts of your expenses, a budget will help you reduce or avoid debt.