Basics Beginner: Budgeting

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1.
You should avoid spending money on wants.
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False. Wants are okay to spend money on and may be items that we allow ourselves to pay for as a reward for hard work and saving. The key is to ensure you are not forgoing spending money on or saving for other needs not taken care of yet. In other words, what is the opportunity cost of paying for your want?
2.
A budget is a written comparison of your _______.
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Cash inflows and outflows. Money coming in is compared to money going out to cover your expenses, loan payments, and savings. It shows how you are spending and saving income.
3.
Making a decision to purchase something based on your wants is less expensive than basing it on your needs.
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False. Wants are generally more expensive. You may need to buy a pair of jeans, and may want a $150 pair of designer jeans but you only need jeans that cost under $40.
4.
When it comes to using a budget, what does it mean to 'pay yourself first'?
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Set aside money from your income into a savings plan. Paying yourself first ensures that you are prepared to deal with future financial issues.
5.
Budgeting software can provide financial forecasts for your financial data.
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True. Not all software offers this, however. The ones that do are more advanced and pricey.