Podcast
Questions and Answers
Which of the following is the most accurate definition of a budget?
Which of the following is the most accurate definition of a budget?
- A record of past expenses and income.
- An estimate of savings for a specific period.
- A detailed breakdown of expected income for a period.
- A detailed breakdown of all income and planned expenses for a specific period. (correct)
Creating a budget is only useful for individuals with high incomes.
Creating a budget is only useful for individuals with high incomes.
False (B)
Name three principles of budgeting that apply to everyone irrespective of their income.
Name three principles of budgeting that apply to everyone irrespective of their income.
Everyone has needs, everyone has aspirations, and everyone needs and uses money to meet their needs and aspirations.
One way to make your money work is by using a rewards ________ ________ for every purchase and paying balances in full at the end of the month.
One way to make your money work is by using a rewards ________ ________ for every purchase and paying balances in full at the end of the month.
Match each step with its corresponding description in household budgeting:
Match each step with its corresponding description in household budgeting:
Which of the following is NOT a recommended step in managing your money effectively?
Which of the following is NOT a recommended step in managing your money effectively?
Fixed expenses vary significantly from week to week or month to month.
Fixed expenses vary significantly from week to week or month to month.
List three examples of how to increase income when expenditure exceeds income.
List three examples of how to increase income when expenditure exceeds income.
The part of a person's income that is not spent on consumer goods or services, but accumulated or invested, is known as ________.
The part of a person's income that is not spent on consumer goods or services, but accumulated or invested, is known as ________.
Which of the following is a SMART goal?
Which of the following is a SMART goal?
A budget is only useful for tracking expenses, not for planning savings.
A budget is only useful for tracking expenses, not for planning savings.
What are the four steps in household budgeting mentioned?
What are the four steps in household budgeting mentioned?
Expenses that change from week to week or month to month, due to price change or varying needs, are known as ________ expenses.
Expenses that change from week to week or month to month, due to price change or varying needs, are known as ________ expenses.
What is the primary purpose of drawing up a budget?
What is the primary purpose of drawing up a budget?
If your income is greater than your expenditure, you should avoid creating a savings plan.
If your income is greater than your expenditure, you should avoid creating a savings plan.
Besides increasing income, what is another primary strategy for balancing income and expenditure?
Besides increasing income, what is another primary strategy for balancing income and expenditure?
Specific regular amounts that usually involve a contract or agreement are known as ________ expenses.
Specific regular amounts that usually involve a contract or agreement are known as ________ expenses.
Which of the following is a key element in controlling and recording your spending?
Which of the following is a key element in controlling and recording your spending?
When income and expenditure do not balance, the only solution is to increase income.
When income and expenditure do not balance, the only solution is to increase income.
What does it mean to 'evaluate your budget' as the the last step in household budgeting?
What does it mean to 'evaluate your budget' as the the last step in household budgeting?
Flashcards
What is a budget?
What is a budget?
A detailed breakdown of all your income and planned expenses for a specific period; an itemised money plan.
Budget components
Budget components
A plan itemizing expected income, expenses and savings for a period.
Principles of budgeting
Principles of budgeting
Needs, aspirations, and the understanding that everyone uses money to meet these needs and aspirations.
Controlling and recording your spending
Controlling and recording your spending
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Make your money work
Make your money work
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Steps in Household Budgeting
Steps in Household Budgeting
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Increase Income
Increase Income
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Spending Less
Spending Less
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Savings
Savings
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Net Income
Net Income
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Fixed Expenses
Fixed Expenses
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Variable Expenses
Variable Expenses
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Study Notes
- A budget is an itemized money plan
Components of a budget
- Expected income for a period
- Expected expenses for the same period
- Savings for that period
- A detailed breakdown of all income and planned expenses for a specific period should be included
Principles of budgeting
- Principles of budgeting apply regardless of income
- The 3 things that apply to everyone are:
- Everyone has needs
- Everyone has aspirations
- Everyone needs and uses money to meet their needs and aspirations
Managing money
- Spend less than you earn
- Prepare for unexpected expenses with an emergency fund
- Make your money work by using a rewards credit card for every purchase and paying balances in full at the end of the month
- Set realistic goals and objectives (SMART goals)
- Assess needs and wants
Controlling and recording spending
- Monthly bank statements
- Proof of credit card balances
- Purchase slips with guarantees
- Receipts
Steps in household budgeting
- List your anticipated income
- Estimate expenses, then list and prioritize
- Calculate the difference between income and determine savings
- Evaluate your budget by tracking, trimming and setting targets
Income and expenditure imbalance
- Increasing income includes working overtime, additional part-time jobs, or renting out a room in your house
- Reducing expenditure includes making cuts, home-cooked meals, and using public services
Budget definitions
- Savings are the part of a person’s income that is not spent on consumer goods or services, but accumulated or invested.
- Net income is all the income that an individual or household receives after all deductions from gross income have been made
- Fixed expenses are specific regular amounts that usually involve a contract or agreement
- Variable expenses change from week to week or month to month, due to price change and different needs/circumstances
Why draw up budgets
- Financial statements and budgets allow you to evaluate your financial performance over a specific period
- Without a budget, you do not know what is happening to your money and will be less likely to save anything
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