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Budgets And Being Frugal Essay

1040 words - 5 pages

To be frugal is to know how to live on a budget (verb) and to live on a budget we need to know what a budget (noun) is. The word budget is often said to come from the Latin word bulga meaning little pouch or knapsack. But there is so much more to the word. The definition of a budget is an estimate of income and expenditures for a set period of time. According to David Ramsey, an expert of finance, a budget basically is a plan for your money or telling your money what to do. Now the first budget was presented in India on April 7, 1860 by the East India Trading Company to the British Crown by James Wilson. This brought clarity to British Crown on the finances that were going on.
Now these are ...view middle of the document...

The third reason to have a budget is to plan for what prerequisites need to be taken care of, for example, tuition, bills shopping, and entertainment. The reason this is important is, because if money isn’t given specific directions then when money is needed to be paid to specific companies and people for charges you have for living, loans, and other expenses. For example, if Ted is renting an apartment, but has no budget for his expenses a bill could “appear out of nowhere” and he might not have the money to pay it at that time. Ted’s lack of a planned budget could cost him his apartment, losing one of the basic needs.
Now that it is clear that everyone needs a budget, it is time to learn how to make one. The first step is to know your income or the money you are receiving. Your income comes from several different ways you receive money. All of the ways you get money need to be recorded and plainly stated, for instance, checks from jobs, allowances, gifts etcetera. Knowing how much you are getting is not enough to have a healthy budget. You also need to know the nature of your income for instance, scheduled raises and deductions. Knowing these things you can have your money planned out better than most Americans.
The second step is to know your expenses or what you spend. Being in college, students’ expenses are what cripple an income if a good and working budget is not in place. For instance, rent for those who live off campus is a very important expense. Food is another, and is usually consumed at least twice a day. Utilities like cell phone, electric, water, and car payments are also essential for one’s day to day lifestyle. Also keep in mind regular every day spending. Let's say you bought new clothes and also had to pay for parking at an event, all of those are expenses...

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