What is the difference between fixed and flexible expenses? Fixed expenses are paid continiously and consistantly. For example, utilites and loans. Flexible expenses can change month to month, for example, the money you use for food and entertainment. Compound interest means that each time interest is received on an interest bearing investment, it is added to or compounded into the investment principal and thereafter also earns interest. For example, a bank deposit balance is estimated each day for daily compounding. Common compounding periods are daily, monthly, quarterly, annually and continuously. The more frequent the compounding period, the higher the effective rate of interest. Simple interest is used on loans with a single payment. Interest is calculated on the amount of the loan during the time period for which the money is borrowed. The effective rate is the same as the stated rate.
What is the importance of savings? Saving can insure you're able to retire at an appropriate age. They also can be used as emergency funds as well as a means to use cash instead of lots of credit piling up. The more you save the more comfortable you can live later on in life. This doesn't mean you shouldn't spend money. You don't need to live miserable to ensure a better life later. Decide on a set amount you will put away for savings each month, the money left over then can be used for extras; food, entertainment, fun.Links to help:
http://christianpf.com/make-a-personal-budget/ (article)
Link that helped me: http://www.extension.iastate.edu/agdm/wholefarm/html/c3-05.html
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