Personal budgeting is the process of creating a plan to manage your income and expenses. It helps individuals track where their money goes each month, allowing them to allocate funds for necessities like housing, food, and transportation, while also setting aside money for savings and discretionary spending. By establishing a personal budget, individuals can identify areas where they may be overspending and make adjustments to improve their financial health. This practice can lead to better decision-making regarding debt, savings goals, and future investments, ultimately promoting financial stability and security.