Running head: PERSONAL BUDGET PLAN
Personal Budget Plan
PERSONAL BUDGET PLAN
In an ideal economy, the higher the income, the higher the consumption and the savings.
However, there exist some economic constraints to spending that make consumers not fully
achieve the desired utility, due to limited income compared to the desired consumption.
Therefore, consumers experience an opportunity cost on some goods where they can only
consumer a bundle of other goods which they consider essential to them (Garman & Forgue,
2011). It therefore necessitates for a personal budget plan which balances the disposable incomes
and the total expenditures, especially on consumption. A personal budget plan thus shows how
an individual will be spending a certain amount of money over a given time period in future
(Garman & Forgue, 2011). A budget allows individuals to determine in advance whether, they
have enough income to facilitate expenditure on some goods, prioritize essential goods and
services required for consumption and avoid overspending during the specified period.
Personal budgeting is important in aspects such as; it enables one to save for the future,
since they include savings in the budget, which thus covers for any emergencies in future. It also
helps individual rectify their daily consumption trends for sustainability in future. Budgeting also
helps consumers n...