Why are budgets needed?
To ensure the best use of money
To live with your means
To not overspend
To highlight the areas of overspending
To see if you will have savings
Who needs a budget?
How can a deficit budget be reduced
Increase income, work overtime
Reduce spending especially discretionary
Spread out payments over the year
Get a bank overdraft
What is a Bank overdraft
It is a short term loan
The bank gives you permission to send more than you have in your account
You must pay it back within one year
Interest is also charged
What can be done with a surplus budget
Pay off loans (debt)
What is a budget?
A budget is a plan of the future income and expenditure.
Planned Income-Planed Expenditure: 500 - 300. 200 left=Surplus.
Planned Income-Planned Expenditure: 200-300. Overspent by 100=Deficit