Chapter 3 Budgeting: Using Your Money Wisely 45 Copyright Goodheart-Willcox Co., Inc. May not be reproduced or posted to a publicly accessible website. LO 3-1 LO 3-1 Budgets After you learn some of the basics of financial planning, the next step toward your financial plan is to create a budget. What is a budget? A budget is a plan for the use of money over time based on goals, income, and expenses. It is an estimate of categories of expected income and expenses for a given period of time. A budget may be prepared for a week, month, or longer period such as a year. It is a useful tool that can help you keep track of your money and spend it wisely. In chapter 1, you set short-term and long-term financial goals. They were based first on your values, then on your needs and wants. These goals will help guide you as you create your budget. Go back and look at the goals you set. Make sure they are appropriate so you can use them to create your budget. Check Your Understanding What is the purpose of a budget? __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ Iakov Filimonov/Shutterstock.com A budget is a plan for the use of money over time based on goals, income, and expenses. Describe the system you use to keep track of money you earn and money you spend.