When preparing a budget, you should plan for what expense first?

• A. Savings
• B. Rent
• C. Utilities
• D. Entertainment

Answer: (A)

Paying yourself first is the idea behind budgeting that makes the most sense here. By prioritizing savings, you set aside money for emergencies, short-term goals, and long-term plans before you spend on other categories. This creates a financial cushion and helps you avoid relying on credit when unexpected expenses arise.

After you allocate savings, you can cover essential needs like rent and utilities with what’s left. Essential expenses are important, but if you don’t reserve any money for savings first, you risk not meeting future goals or building resilience against surprises. Entertainment and other discretionary spending should come after the essentials and savings, since they’re optional rather than necessary.

In short, saving first establishes financial stability and progress toward goals, making it the best first-planned expense in a budget.