INCOME, EXPENSES
AND BUDGETING
BY –
NAME – PRIYA YADAV
COURSE – BCOM(P), SECTION – B, SEMESTER – 1
ROLL NO. – 24BPB015
SUBJECT – FINANCIAL LITERACY
INTRODUCTION :-
• Are you sometimes short of cash at the end of the month? Don’t seem to be able
to save for the things you really want? You can learn to balance your income with
your expenses- and even have some money left over for savings and extras. Let
me show you all how to manage your incoming and outgoing finances.
• SETTING PRIOORITIES: NEEDS AND WANTS –
• What Are Needs?
Essential for survival or well-being. Must be met before other financial goals.
Examples: Housing, Utilities (electricity, water), Food, Healthcare, Transportation .
• What Are Wants?
Non-essential items that enhance comfort or pleasure.
Can be adjusted or eliminated based on available income
INCOME :-
• Income refers to the money
you receive, typically in
exchange for your work or
investments. It is the
starting point of a budget,
as it determines how much
you have available to
allocate to various
expenses and savings.
EXPENSES :-
• Expenses are the costs
or money you spend to
meet your daily,
weekly, monthly, or
yearly needs. They can
be fixed (regular and
predictable) or variable
(fluctuating and less
predictable).
TYPES OF INCOME AND
EXPENSES :-
• Types of Income: • Types of Expenses:
• Fixed Expenses: These remain
• Earned Income: Money from
constant each month. Examples include
your job, wages, salary, rent, mortgage, utilities, car payments,
commissions, and tips. insurance, and loan repayments.
• Passive Income: Earnings from • Variable Expenses: These can change
each month, such as food, gas,
investments, such as dividends,
entertainment, clothing, and medical
royalties, rental income, or expenses.
interest from savings. • Discretionary Expenses: These are
• Unearned Income: Includes non-essential purchases, like dining out,
benefits like social security, vacations, and luxury items.
• Non-Discretionary Expenses:
child support, alimony, and
Necessary expenses like bills, rent, and
other government payments. utilities that cannot be easily cut.
BUDGETING :-
• Budgeting is the process of creating a plan to manage your
income and expenses. A budget helps you to allocate
money for various needs, control your spending, and
prioritize savings. The goal of budgeting is to ensure that
your spending doesn't exceed your income and that you
can save for your financial goals.
• Key Steps in Budgeting:
1- Track Your Income and Expenses: Keep track of all your sources of
income and every expense. There are apps and tools to help you
automate this process.
2- Set Goals: Define your financial objectives, such as saving for a
vacation, paying off debt, or building an emergency fund.
3- Create a Plan: Based on your income and goals, allocate money to
necessary categories (e.g., housing, utilities, groceries) and ensure you
are saving a portion of your income.
4- Use the 50/30/20 Rule (Optional):
• 50% to Needs: Essential living expenses (rent, utilities, groceries).
• 30% to Wants: Non-essential items (entertainment, dining out).
• 20% to Savings/Debt Repayment: Pay down debt or put money in
savings.
5- Monitor and Adjust: Review your budget regularly to track your
spending and make necessary adjustments to stay on track.
WHY BUDGETING IS IMPORTANT:-
• Helps Control Spending: You can avoid overspending and
make informed decisions on where your money goes.
• Saves Money for the Future: A budget encourages savings,
allowing you to create an emergency fund or save for goals.
• Debt Management: A budget helps you prioritize paying off
high-interest debt.
• Financial Awareness: It gives you a clearer picture of your
financial health, highlighting areas where you can improve.
SAMPLE BUDGET :-
THANK YOU!!
