Question

trace has just gotten an unexpected promotion at work with a higher salary. what would developing a personal budget enable trace to do?

• avoid having to save money for future expenses
• purchase all of the goods and services that he wants
• lower the amount of taxes he is required to pay on the income he receives
• determine what he must set aside for expenses and what amount he can save

Explanation:

• Option 1: A personal budget doesn't avoid saving for future expenses; in fact, it helps plan savings. Eliminate this.
• Option 2: A budget doesn't allow purchasing all wanted goods/services, as income is limited. Eliminate this.
• Option 3: A personal budget doesn't lower tax liability; tax is determined by tax laws. Eliminate this.
• Option 4: A personal budget helps allocate income to expenses and determine savings, which matches the purpose of budgeting.

Answer:

D. determine what he must set aside for expenses and what amount he can save