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Explain three benefits to a household of preparing a budget - Leaving Cert Business - Question A - 2007
Question A
Explain three benefits to a household of preparing a budget. A household budget can provide multiple advantages, each contributing to better financial management. F... show full transcript
Worked Solution & Example Answer:Explain three benefits to a household of preparing a budget - Leaving Cert Business - Question A - 2007
Step 1
Explain three benefits to a household of preparing a budget.
Answer
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Anticipate Financial Problems: Preparing a budget allows households to foresee cash shortages and devise plans to address them, avoiding crisis situations.
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Classify Expenditure Types: A budget enables the classification of expenses into essential (fixed) and discretionary (variable) categories. This helps ensure that important obligations are met while also tracking less critical spending.
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Encourage Saving for the Future: By analyzing their financial situation through budgeting, households can identify opportunities to save, making it easier to set aside funds for future needs or emergencies.