One of the most important tools for managing money and making sure people live within their means while pursuing their financial objectives is budgeting. Understanding income sources and expenses through a wvivo 160ell-structured budget enables people to find areas for cost reduction or to increase their savings and investment allocation. Tracking all earnings and outlays over a given time frame, usually a month, is the first step in making a budget in order to clearly identify spending patterns. After identifying spending trends, people can classify costs into fixed (e.g. G. mortgage payments or rent) and variable (e.g.