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Budget Your Finances

  Creating a budget is an essential first step in taking control of your finances. A budget is a plan that outlines what money you expect to earn or receive (your income) and how you will save it or spend it (your expenses) for a given period of time. Budgets are also called spending plans. 

This may seem stressful or difficult, it does not have to be! 

Try tracking your spending for just a month to start. Housing, transportation, groceries, and insurance are necessities to be prioritized, but are there other areas where you are spending too much? A budget can help get your finances on track for good.

In the long run, a budget—even a simple one—can help you save money each month, build up a down payment to purchase a house, buy a car, pay for college, grow a retirement savings, and have financial security throughout your lifetime.

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     Key Terms

    Debt: Money you owe another person or a business.

    Expenses: What you spend your money on, including bills, food, clothing, housing, and transportation.

    Fixed expenses: Expenses, like bills, that must be paid each month and generally cost around the same amount (such as rent, utilities, car payment, car insurance, etc.).

    Income: Money you earn or receive. This can include wages or salaries, tips, commissions, contracted pay, government transfer payments, dividends on investments, tax refunds, gifts, and inheritances.