What financial tool can help individuals improve their spending habits?

A budget is a financial tool that enables individuals to track their income and expenses, providing clarity on where their money is going. By creating a budget, individuals set limits on spending in various categories, which encourages more mindful financial decisions. This structured approach allows them to identify unnecessary expenditures, prioritize essential costs, and allocate funds towards savings and investments.

Ultimately, a budget serves as a roadmap for financial management. It not only highlights areas where individuals may overspend but also helps them set financial goals, whether that’s saving for a large purchase, paying off debt, or building an emergency fund. Using a budget regularly fosters discipline and accountability, which are essential for improving overall financial health and spending habits.