Personal Budgeting
Senior 2 · Entrepreneurship
Personal Budgeting
Lesson 3 of 4
18 min
Every June the Minister of Finance presents Rwanda's national budget to Parliament: a plan of what the government expects to collect and spend in the coming financial year. Businesses, families and individuals need the same kind of plan on a smaller scale. Without one, money tends to disappear on small things while the important ones go unpaid.
A budget is a plan of expected income and expected spending for a future period, such as a week, a month or a year. Budgeting is the process of preparing that plan, following it and reviewing it.
| Type | Meaning | What it tells you |
|---|---|---|
| Balanced budget | Expected income = expected spending | Everything is planned, but nothing is left over for surprises unless savings are included as a spending line. |
| Surplus budget | Expected income > expected spending | Money left over can go to savings or an emergency fund. |
| Deficit budget | Expected income < expected spending | The plan must change: cut spending, raise income, or borrow (only if repayment is planned). |
Written by Ganzaa. Three S2 students plan their month:
Tip
Memory hook. Income minus planned spending: zero means balanced, positive means surplus, negative means deficit. A budget does not need a big income; it is most useful when money is tight.
Solution: A plan of expected income and expected spending for a future period.
Solution: 18,000 − 16,500 = 1,500 Frw, so it is a surplus budget with a surplus of 1,500 Frw.
Solution: Any three of: controls spending, puts needs first, helps reach goals, avoids debt, prepares for emergencies, measures progress, reduces stress.
Solution: Cut spending on wants (snacks, entertainment); find extra income (for example selling eggs or doing paid chores); do not plan to borrow unless repayment is certain.
Summary
Sources and credits
The budget examples and the practice items are written by Ganzaa.
This lesson adapts CC BY-SA material and is shared under CC BY-SA 4.0.
