Personal Budget

A personal budget consists of many different things like fixed and flexible expenses. Expenses that continue at relatively stable levels,month after month or year after year are referred to as fixed expenses. Typical household fixed expenses are mortgage or rent payments, car payments, real estate taxes and insurance premiums. Flexible expenses are costs that are easily changed, reduced or eliminated. Spending money on entertainment and clothing represent flexible expenses. Even expenses that must occur, such as a grocery bill, can be considered flexible because the amount spent can vary. Other terms associated with personal budgeting are compound and simple interest. Simple interest basically is the amount you borrowed times the interest rate. In other words, 5% interest on $1,000 is $50. Compounding interest is "interest on interest." It is a method of calculating interest where the interest is added to the original principle. Compounded interest is usually compounded monthly and sometimes yearly. However, budgeting your money and saving it comes down to simply being smart with your money. If you can, every day,  week, or month, set some money aside towards savings. It's ok to spend money now but stretch your dollar by all means necessary. You never know what emergency expenses can come up and setting aside money monthly can be used for things like replacing a flat tire or replacing a broken windshield. 

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