Question

What is the reason it's better to underestimate your income instead of overestimating when creating your budget?

Answer 1

Answer:

• Underestimating your income is a conservative and healthy measure that can avoid financial problems.

Explanation:

Underestimating your income is a conservative and healthy measure, such as it is overestimating your expenses.

Specially when your income is variable iit can be hard to predict. You will be safer both if your income lowers or your unpredictable expenses increase.

There are many unpredictable situations that could put you in a difficult situation: a disease, a natural disaster, the need to help a family member or friend in trouble. If any of these unfortunate circumstances arises and your budget is too tight, you could see yourself in financial trouble.

But, if you if all is smooth you will have in a happy situation, you will have a surplus which can use for savings, for an important purchase, or for vacations.

It is better to be cautious than to regret later!