Question

When Pei received a one-time inheritance from her grandmother, she considered including it in her budget as income. What is the problem with taking that approach?

Answer 1

The problem with including a one-time inheritance in Pei's budget as income is that it is not a recurring or predictable source of income. Budgeting typically involves planning for regular income and expenses over a specific period of time, usually monthly. Since the inheritance is a one-time event, it cannot be relied upon as a consistent source of income in the long term. Including it in the budget as income may lead to unrealistic expectations, improper financial planning, and potential financial difficulties once the inheritance is depleted. It is more appropriate to consider the inheritance separately, such as using it for specific financial goals, investments, or paying off debts.