Savings, Expenses & Budgeting

This chapter introduces the basic aspects of budgeting and how budgeting benefits your progress toward attaining your desired lifestyle and reaching your financial goals. You will understand how savings forms the foundation of your financial planning, and learn the components of a savings plan. In a further topic, you will comprehend the importance of evaluating every purchase based on whether it is a “need” or a “want” and know how to calculate opportunity cost.
As the chapter continues, you will be introduced to the three primary types of expenses and tactics for reducing monthly payments toward those expenses. Action steps for creating a solid budget and automating financial accounting systems to facilitate regular review and revisions are provided. The last two topics in the chapter cover the processes involved with two major expenses individuals typically encounter during their lifecycles – automobile purchase and renting a home.