A budget should be based on a person's \( \square \) income.

A budget should ideally be based on a person's **net** income, which is the amount left after taxes and other deductions. This ensures that the budget reflects the actual amount available to spend, allowing for realistic planning and financial health. Knowing your net income helps prevent overspending and encourages you to allocate funds efficiently to necessities, savings, and fun! Many people make the common mistake of budgeting based on gross income, which can lead to financial stress and unmet goals. Always remember to account for all regular expenses, such as rent or mortgage payments, utilities, groceries, and entertainment. Additionally, not setting aside an emergency fund can be a significant error; unexpected expenses will arise, and being unprepared can lead to financial turmoil!