Write a one-page essay that explains at least four reasons why you believe that people do not budget or develop even a simple plan for balancing income and expenses, including saving for goals. Review Worksheet 1 or Worksheet 2 for examples of financial objectives and goals for which households are most or least prepared.

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FIGURE 2.1 The Budgeting and Planning Process: Evaluating Your Financial Health and Developing a Plan of Action STEP 1 Evaluate Your Financial Health Prepare a personal balance sheet. Determine what you're worth and prepare a personal income statement. Use ratios to monitor your financial health. Determine where your money comes from and where it goes. STEP 2 Define Your Financial Goals Identify what you are saving for and how much you need to save. STEP 3 Develop a Plan of Action Make your spending conform with your budget goals. STEP 4 Implement Your Plan Just do it! STEP 5 Review Your Progress, Reevaluate, and Revise Your Plan