1. Spending and Savings
Most people cannot obtain all of their wants. Instead, they have to make choices.
Making a personal budget helps people understand their economic choices more clearly.

2. Budget and Expenses A budget is a plan for spending and saving money.
Each month, you set aside a certain amount of money for your expenses.
Expenses are money that you pay to buy items like groceries, or to pay bills, such as the rent or the telephone bill.

3. Making a Personal Budget
The 1st step in making a personal budget is to figure out your monthly income.
Your income is the amount of money you take in. Usually your income comes from your job. Sometimes, people have investments that produce income for them.
An investment is something you buy for future financial benefit, such as a shares in a company.

4. Types of Expenses
Fixed expenses are the same every month, examples, rent, car payments, and health insurance.
Variable expenses occur every month but can change in amount: for example, gasoline, telephone bills, or electricity bills.
Discretionary expenses are expenses you can control yourself, such as going out to eat or the movies.

5. 3 things to Remember about a Personal Budget
#1 A budget has to be useful.
#2 Your budget needs to be part of your daily life from month to month.
#3 Your budget needs to be reasonable

6. Decisions About Money Many people decide to put money in savings.
They do this for 2 reason:
#1 Interest-is money paid for the use of money.
For example: You put $500 in the bank at 5% interest, in 1 yr. you would make $
#2 Cushion for emergencies –extra money stored away for unexpected expenses.

7. Businesses’ Budgets
Businesses and governments also use budgets to make decisions about spending money.
Businesses will put more money in newer equipment to keep up with the competition.

8. Government's Budgets
Governments make budgets to balance their needs and wants.
Examples of some government WANTS:
space program, retirement, and education
FYI: In 2009 the US budget was $3.1 trillion. That looks like this:
$3, 100, 000, 000, 000