Budgeting and Estimating Expected Expenses

Budgeting and Estimating Expected Expenses

When you wake up each morning to go to school, you know that you need to shower, get dressed, eat some breakfast, and run to the bus stop.  If you spend too much time on any of these tasks, you might miss your bus.  In other words, each morning you will have to manage your time or face the consequences of missing your bus.

And when you go on a hike, you typically carry a water bottle with you and sip on the water with the hope of trying to make it last for the full distance. In other words, you try to conserve your water to make it last for your full hike.

When you are managing your time or your water, whether you realize it or not you are already “budgeting.”

In a few years when you get a job or go off to college, you will probably be living on your own in an apartment or dorm.  To budget your money properly then, you will need a firm grasp of your monthly income (paychecks and/or allowance) and your monthly expenses (rent, car payment, gas, utilities, food, etc.).

What makes budgeting hard is that it is easier to estimate your monthly inflows than your outflows. In life, there are so many unexpected expenses that occur that can wreck you budget like flat tires, speeding tickets, breaking your cell phone, car repairs, clothes that you “must have”, medical bills, etc.

By keeping track of your income and expenses, and always allowing for the unexpected, you are more likely to spend your money more wisely and not run out of money each month.

Did You Know?

  • In 2019, 41% of U.S. households use a budget.
  • The US Government’s budget for 2020 is almost $5 trillion.

At the beginning of every month, you will see your expected income and expenses. But beware of the unexpected expenses that will try to wreck your budget.

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About Kevin Smith

Kevin is the content manager for Personal Finance Lab and is from Chicago, Illinois. He has a Master's Degree in Economics from Concordia University in Montreal, Canada. In addition to an economics background, he has also built training manuals to prepare finance companies for licensing requirements in mortgage loan origination and insurance sales.