Budgeting skills involve the ability to create and manage a financial plan that outlines income and expenses. This process helps individuals track their spending, save for future goals, and avoid debt. Key components include setting realistic financial goals, categorizing expenses, and regularly reviewing the budget to make necessary adjustments. Effective budgeting also requires discipline and organization. Individuals must prioritize their needs over wants and make informed decisions about discretionary spending. Tools such as spreadsheets or budgeting apps can assist in maintaining an accurate overview of finances, ensuring that one stays on track to meet their financial objectives.