Which of the following should NOT be considered when setting a current budget?

Which of the following should NOT be considered when setting a current budget?

1. your financial goals

2. future income

3. needs and wants

4. savings

Answer: 2. future income

When creating a current budget, bear in mind that it is often unwise to include future income that has not been generated. Budgeting with the expectation of some future income is usually very disadvantageous because the money may be used up and no form of income is expected. Any reliable budget should be based on its present state or, at least, the income that you have at your disposal or can foresee shortly. For example, if one is a freelancing worker with expectations of a large project in the next month, it would not be right to borrow and spend for the current month expecting the money for the large project to pay the debts. In this case, the project may fail or may pay less than anticipated, and this puts you in a very wrong position if you had early committed yourself financially to these higher expenses. However, a current budget should first of all take into account the income that you currently receive, the expenses that are then incurred and the financial objectives that you wish to achieve shortly. It should include your expenses for necessities, including shelter and food, against the luxury or the wants in life such as entertainment or non-necessities. It is equally important to incorporate the current savings capacity into the budget since everyone must save for emergency and/or future needs. It means you form a realistic pattern of finance that can be successfully managed in the short run while striving for the long-term financial goal; instead of relying on probable future income as the major source of finance.