Why is it important to track your income and your expenses? (1 point)
A.because knowing whether you can afford your lifestyle or not is the first goal of financial literacy
B.because knowing whether you can afford your lifestyle or not is the only goal of financial literacy
C. because you need to by law
D. because your income will tell you how much money you can save
A. because knowing whether you can afford your lifestyle or not is the first goal of financial literacy
A. Because knowing whether you can afford your lifestyle or not is the first goal of financial literacy.
The correct answer is A. because knowing whether you can afford your lifestyle or not is the first goal of financial literacy.
Tracking your income and expenses is crucial for managing your personal finances effectively. Here's why it is important:
1. Assessing affordability: When you track your income and expenses, you gain a clear understanding of your financial situation. It allows you to see if your income is enough to cover your expenses and if you are living within your means. By knowing whether you can afford your lifestyle, you can make informed decisions about spending, saving, and investing.
2. Budgeting: Tracking your income and expenses enables you to create a budget. A budget helps you allocate your income in a way that aligns with your financial goals. With a budget, you can prioritize your expenses, identify areas where you can cut back, and allocate funds towards savings or debt repayment.
3. Identifying financial leaks and opportunities: By tracking your expenses, you can identify any unnecessary or excessive spending. This allows you to make adjustments and find opportunities to save money. For example, if you notice that you spend a significant amount on eating out, you may decide to cook more at home and save money in the process.
4. Planning for the future: Knowing your income and expenses allows you to plan for the future. You can set financial goals, such as saving for a house, retirement, or a vacation. Tracking your income and expenses helps you determine how much you need to save each month to achieve those goals.
In conclusion, tracking your income and expenses is essential for gaining financial control, making informed decisions, and working towards your financial goals.