Flashcards in Guidelines to follow when preparing a budget Deck (7)
List five guidelines for the preparation of a budget
Estimate total income
List all expenditure
Allocate a percentage of income
Review and evaluate
Explain how one estimates their total income as the first part of making their budget
Include benefits or any other form of income
Do not include irregular income such as bonuses
Divide estimate by twelve if making a monthly budget
Divide by 52 if making a weekly budget
Why should irregular income not be included when estimating a person's total income?
As these are not guaranteed
What expenditure should be listed in a budget?
Essential and discretionary expenditure
To what should a percentage of income be allocated to when making a budget?
A percentage of total income should be allocated to each listed expenditure
Explain the savings element of a budget
Every budget contains a saving element to cover unplanned eventualities
Savings allow for funds to be available in times of increased expenditure
Savings should be lodged into a separate savings account