Personal Budgeting

Question 1

What is the first stage in measuring your financial position?

Answer 1

Identify your income and expenses

Question 2

How can we identify our income and expenses?

Answer 2

By preparing a personal cash budget and possibly a personal balance sheet to see whether we are spending more than we are earning

Question 3

Why should we budget?

Answer 3

To ensure expenditure doesn’t exceed income, help start a savings plan, work out how to afford a big budget item, building a reserve to cover expenses that are unforeseen, to pay off debts

Question 4

How can we predict income and expenditure?

Answer 4

By using payslips, receipts, bank statements, credit card statements, and bills

Question 5

How can we monitor the bank balance?

Answer 5

By comparing each month’s income and expenditure to arrive at net income or expenditure for the month

Question 6

How can we reduce expenditure?

Answer 6

Distinguish between essential and non-essential expenditure, and reduce it where possible

Question 7

How can we increase income?

Answer 7

Extra shifts or overtime, extra job or freelance, rent a room, sell unwanted items

Question 8

What are the different types of borrowing?

Answer 8

Bank overdrafts, payday loans, peer-to-peer lending websites

Question 9

How much should you have saved?

Answer 9

Most advisers agree that an amount of between 3-6 months income should be kept readily accessible

Question 10

How can we monitor the budget?

Answer 10

By keeping it updated, adjusting for changes, should not be prepared then ignored