In your budgeting process, when should you look at recurring expenses?

In your budgeting process, when should you look at recurring expenses?

A. – Before looking at your needs

B. – After your wants but before you needs

C. – After considering entertainment expenses

D. – Before reviewing your wants

Answer: D. – Before reviewing your wants

In budgeting, it is advisable to go through the expenses that are repetitive before revisiting the desire. It is useful to ensure that one witnesses disciplined spending by separating the needs that need financing from the wants by noting priority over the two areas. They include those expenditures which are regular and essential in the operation of an organization’s activities and include expenses like rent or mortgage, utilities, insurance and other forms of repayment. This way you pay the ‘must haves’ before you get to the ‘nice to haves’ or the frivolous spending as some people may call it.

For instance, if we are speaking about the monthly budget that is equal to $3000. This way you might initially establish a number, like $1,000 for rent, $200 for utilities, $300 for car payments, $200 for insurance and so on. This makes the total of the recurring expenses to be $1,700 only. Before you start spending your money on things that you would like to buy like movies, eating out or new clothes, you have to take into consideration your needful expenses. It minimizes the chances of spending on things not of much necessity and helps avoid failing to meet necessary bills. It also gives the vision of how much money is left over after the necessities in life are paid for. Hence, by targeting regular bills to incorporate them in the budget plan, one can set a realistic budget that addresses society’s needs while still satisfying one’s wants, therefore making him/her financially strong and less worried about basic needs that may be a result of poor financial planning.