Forming and sticking to realistic budgets is one of the most important skills you can learn. It is essential to understand your income and expenditure levels precisely.

Very often, it is harder to monitor expenditure closely. Try keeping a diary of everything you spend in one week. Often small purchases add up far more than you might imagine over a more extended period.

Many people are surprised when they discover how much of their income they use on small items. The above example showed how relatively small purchases such as soft drinks or a weekly visit to a fast-food restaurant with friends add up significantly over a year. Small non-essential purchases often have to be stopped to afford more significant purchases. If the person gave up soft drinks in the example given, they would have saved 500 dirhams a year.

A good understanding of what is essential (needs) will allow you to budget accurately and sensibly. As a child, you will have relatively few essential expenditures. Adults have to provide the basic needs for their families. Adults have to learn to carefully budget so they know how much can be saved or used for non-essential purchases.