Content Overview 
- Summary
- Step 1. Find Out What Your Spending Patterns Are
- Step 2. Break Your Expenses Down By Core Expenses (Expenses You Can't Do Without), Discretionary Expenses And Unnecessary Expenses:
- Step 3. Consider Whether There Are Ways To Spend Less For The Things You Need
- Step 4. Think About Your Goals For Your Money
- Step 5. Set Flexible Rules For A Budget That Fits Your Circumstances
- Step 6. Create The Budget
- Step 7. Give The Budget A Trial Period By Using Apps Or An Envelope To Help Keep Track
- Step 8. Tweak The Budget As Time Goes Along
Budget: Creating/Living With
Step 2. Break Your Expenses Down By Core Expenses (Expenses You Can't Do Without), Discretionary Expenses And Unnecessary Expenses:
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- Core expenses: Core expenses are essential items such as food, shelter, transportation, and medical care. While you don't want to do without any of them, consider if they could be reduced. See Spending Less.
- Discretionary expenses: Discretionary expenses are the things you pay for which are not key to your survival but necessary for your lifestyle -- for instance, gifts and entertainment. Sometimes things that are discretionary can become essential. For example, if you are stressed out and seeing a movie is one of the best ways you can relax, then the expense of a movie that relieves your stress might be considered "core" because reducing stress can help improve health.
- Unnecessary expenses: These are expenses that you never need to incur.
If it becomes difficult to identify discretionary or unnecessary expenses, pretend you are a friend looking at your list or, even better, have a friend or family member look at your list and give you their opinion.
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