Define a budget. Briefly explain the two classifications of expenditures.
What will be an ideal response?
Answers will vary. One of the first steps in getting control over your financial situation is to develop a budget, which is a detailed forecast of your expected cash inflows (income) and cash outflows (expenditures).Your expenditures can be classified into discretionary and nondiscretionary categories. The payments you have the most control over are called your discretionary payments. Perhaps you like dining out, nightclubbing, or shopping. Perhaps you just have expensive taste in coffee.Nondiscretionary payments are those you have little control over, such as your monthly rent or car payment, which are set by contract. Your lifestyle may also lock you into other costs that are at least partly nondiscretionary. Given your need to get to school and work, you may have to spend a significant amount of money on gas and car maintenance every month. But with a little flexibility and creativity, you may find that such costs aren't completely nondiscretionary. For instance, you might be able to significantly reduce your expenses for gas and car maintenance by carpooling orusing public transportation.
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