It is extremely important to have a knowledge of budgeting. It simply means how much you make and how much you should spend for your financial stability. When you keep tracking on your expenses in daily life, after a month doing it, you come to know that you spend amount X monthly on entertainment, amount Y on grocery, amount Z in credit card loan and so on.
Basically, it is the fundamental of personal finance. If you do not know budgeting, there are chances that you may face a financial crisis in your life because you start taking loans, and spend money without caring.
It all starts with savings. Well, unfortunately, saving is not considered as a ‘cool thing’ in the USA and Canada. Majority of the time, saving is the last priority when people budget their finances. However, it should be the first priority.
Here is the data that you need to look from Fool.com
As you can clearly, an average American spends excessively on entertainment and restaurants which he/she can easily reduce and plan to save money. Also, nearly 60% of income goes for housing, transportation and personal insurance.
The punchline is, you should track where you are spending money, for what products and services you get by spending money and also you need to make sure that you only spend a dollar when you are in a need for that product or service. If you do not need, avoid buying materialistic stuff.