Question
6. Describe what a spending plan is.
Answer
4.5
(290 Votes)
Willow
Master · Tutor for 5 years
Answer
A spending plan is a comprehensive financial plan that includes the income (money coming in), savings (money saved), and spending (money going out).
Explanation
## Step1: A spending plan is a strategy that allows individuals to manage their financial resources effectively. It is a detailed financial plan that outlines how much money will be spent on different categories over a certain period of time.## Step2: A spending plan includes various components such as income, savings, and spending. ## Step3: The income component refers to the money that is coming in, such as salaries, wages, or other sources of revenue. ## Step4: The savings component refers to the portion of income that is set aside for future use, such as retirement, emergencies, or major purchases. ## Step5: The spending component refers to the money that is going out for expenses, such as bills, groceries, entertainment, and other personal needs or wants. ## Step6: Therefore, a spending plan is a comprehensive financial plan that includes all of the above components.