International Baccalaureate (IB) Practice Exam

Creating a budget is a proactive financial tool that helps individuals track their income and expenses, assess their spending habits, and plan for future financial goals. When you establish a budget, you are essentially setting limits on how much you can spend in various categories, which helps identify areas where you might be overspending. The function of a budget is to encourage responsible financial behavior. By providing a clear overview of financial status, a budget serves to highlight where money is being spent excessively, making it less likely for overspending to occur in those areas. Therefore, saying that a budget makes overspending more likely contradicts the very purpose of budgeting, which is to promote better financial management. Furthermore, budgeting can also facilitate better spending decisions, allowing for increased savings or investment potential, and offering a sense of control over one’s finances. While budgeting does not inherently remove any negative feelings related to spending, it can promote accountability and informed decision-making, resulting in less impulsiveness.