A budget is a document made and used to predict future financial income and expense as well as distribute a particular amount or percentage of income to various expenses over a certain amount of time. A budget gives you the knowledge you need to know to see if you can sustain the way you are living. A budget consists of and can track:
The money you may earn by services or investments which is earned frequently (wages, salary, interest, bank accounts, etc). This is known as an income.
The money which you spend often on essential necessities or things you would like to have (rent, food, bills, phone, etc). This is known as your expenses.
There may be remaining income after the expenses have been deducted from the income. This is known as a ‘disposable income’ which is the money that you can afford to spend or save.
Most of the current day teenagers live a life of no worry when it comes to expenses, income and budgeting. Many of them will be happily buying like this girl, right? And many of them will not even be educated on this topic. I believe budgeting is more important and crucial then it may seem to teenagers. It’s important for teenagers to prepare for large expenses in the future and be educated on what possibilities may happen in the future. Budgeting is also a useful skill because it allows us to appreciate our money, to teach us to live within our means and to assist in avoiding debt.
A budget is a prediction of income and expenditure over a set period of time. From this, data you are able to have knowledge on an estimate amount of money which needs to be distributed and allocated to each expense.
When budgeting it is important to keep in mind to prioritise, this means putting necessities or items which are needed for survival (needs) over items we would enjoy having for personal pleasure but can live without (wants). Examples of these are putting shelter, food, petrol or uniforms before items such as shoes, makeup, skateboards or a basketball.
Another factor of budgeting is expense and income, to correctly budget we must keep in mind there are far more expenses then there are incomes.
When a credit card is received the money can be used to spend on anything you like. This sounds great right? But on the other hand this money wasn't yours in the first place and therefore this credit must be paid back to the provider. If this can not occur this becomes an outstanding balance or a debt on top of this there are additional cost which must be paid. Debts often build up quite easily as the money is more accessible and therefore easier to spend. If the money isn't regularly paid back debt can build up and become a large expense to pay back. People quite generally get into debt when they continue to borrow money on top of their current debt. This leads up especially if they spend more than they earn.
Though having this money is amazing there a consequences for having this money and excessively spending it. Although money is predominately borrowed from the bank and needs to be paid back there is other types of credit such as interest-free deals, store cards, home loans, personal loans and small amount of loans.
On top of debt there is an additional money percentage which must be paid back known as interests this is due to borrowing credit.
Credit card companies understand that there are many payments to make hence having minimum monthly payments which is the minimum amount of a credit card expense you can pay to remain with the company.
A credit report is a collection of your history with payments, the bank and credit this used to tell your capability for frequent repayments.