diff --git a/data/DefaultCurrency.txt b/data/DefaultCurrency.txt
index e69de29bb2..822166bb78 100644
--- a/data/DefaultCurrency.txt
+++ b/data/DefaultCurrency.txt
@@ -0,0 +1 @@
+Default Currency: SGD
\ No newline at end of file
diff --git a/data/ExpenseFile.txt b/data/ExpenseFile.txt
index e69de29bb2..78db31319c 100644
--- a/data/ExpenseFile.txt
+++ b/data/ExpenseFile.txt
@@ -0,0 +1,2 @@
+2024-04-07 | Transport | 100.00 | bus
+2024-04-07 | Transport | 60.00 | train
diff --git a/src/main/java/seedu/budgetbuddy/Ui.java b/src/main/java/seedu/budgetbuddy/Ui.java
index 274bfc664b..7f9e0a57e5 100644
--- a/src/main/java/seedu/budgetbuddy/Ui.java
+++ b/src/main/java/seedu/budgetbuddy/Ui.java
@@ -1,5 +1,7 @@
 package seedu.budgetbuddy;
 
+import java.util.Scanner;
+
 public class Ui {
     private static final String DIVIDER = "__________________________________________________";
 
@@ -41,6 +43,14 @@ public void showMenuTitles() {
         System.out.println(DIVIDER);
     }
 
+    // Method to get user confirmation from the console
+    public boolean getUserConfirmation() {
+        Scanner scanner = new Scanner(System.in);
+        System.out.println("Do you want to proceed with adding this expense? (yes/no)");
+        String userInput = scanner.nextLine().trim().toLowerCase();
+        return userInput.equals("yes");
+    }
+
     /**
      * Displays the menu item based on the given index.
      * @param index The index of the menu item to display.
diff --git a/src/main/java/seedu/budgetbuddy/commons/ExpenseList.java b/src/main/java/seedu/budgetbuddy/commons/ExpenseList.java
index 27a0575afe..ab5d031fc9 100644
--- a/src/main/java/seedu/budgetbuddy/commons/ExpenseList.java
+++ b/src/main/java/seedu/budgetbuddy/commons/ExpenseList.java
@@ -173,6 +173,32 @@ public void addExpense(String category, String amount, String description) throw
             throw new BudgetBuddyException("Expenses should not be negative.");
         }
 
+        // Check against the budget before adding the expense
+        Budget budgetForCategory = budgets.stream()
+                .filter(budget -> budget.getCategory().equalsIgnoreCase(category))
+                .findFirst()
+                .orElse(null);
+
+        if (budgetForCategory != null) {
+            double totalSpent = expenses.stream()
+                    .filter(expense -> expense.getCategory().equalsIgnoreCase(category))
+                    .mapToDouble(Expense::getAmount)
+                    .sum();
+            double projectedTotal = totalSpent + amountAsDouble;
+
+            if (projectedTotal > budgetForCategory.getBudget()) {
+                ui.printDivider();
+                System.out.println("Warning: Adding this expense will exceed your budget for " + category);
+                ui.printDivider();
+
+                // Replace with actual user confirmation in your application context
+                if (!ui.getUserConfirmation()) {
+                    System.out.println("Expense not added due to budget constraints.");
+                    return; // Exit without adding the expense
+                }
+            }
+        }
+
         Expense expense = new Expense(category, amountAsDouble, description);
         expenses.add(expense);