Understanding ratios has really helped me manage my personal budget better.

When you think about it, budgeting is all about comparing what you earn to what you spend.

Here’s how I’ve used this idea:

1. Income vs. Expenses

• I started looking at how much money I make compared to how much I spend.
• For example, if I earn $1,000 and spend$700, my ratio is $700 to$1,000.
• This simplifies to 7:10.
• This ratio shows me that I’m spending 70% of my income, which is useful for keeping track of my savings!

2. Allocating Funds

• Ratios can also help me divide my budget for different needs.
• I follow a 50:30:20 rule.
• This means I use 50% for needs, 30% for wants, and 20% for savings.
• When I know my total budget, I can easily figure out how much goes to each category.

3. Tracking Progress

• By understanding ratios, I can see how my spending relates to my income month by month.
• For instance, if my spending goes above $700, I know I need to rethink how I spend my money.

So, getting the hang of ratios and proportions has really changed my financial choices and made budgeting feel a lot easier!