Question

Which statements best summarize the principles you should use when budgeting? Check all that apply.

Your discretionary spending should be a higher priority than mandatory spending.
You need to be mindful of whether an expense is truly a need, or just a want.
Spending on wants will enable needs to take care of themselves.
The more you save, the more easily you can reach long–term goals.
To create a budget, you need to start by determining your short–term and long–term goals.

Answer 1

Correct choices:
- You need to be mindful of whether an expense is truly a need, or just a want.
- The more you save, the more easily you can reach long–term goals.
- To create a budget, you need to start by determining your short–term and long–term goals.

Why the others are wrong:
- Discretionary spending should not be a higher priority than mandatory spending — mandatory (needs, bills, debt) must come first.
- “Spending on wants will enable needs to take care of themselves” is incorrect — excess spending on wants can undermine your ability to cover needs.