How do I budget?
Before you can make a plan for the future, you need to understand where you are today. So let’s begin by understanding your financial position. The first step is to understand how much money you make – and knowing how much you spend.
It is nearly impossible to know where your money is coming from and where it is going without creating a budget. A budget is an overview of your income and your expenditures over a specific period of time.
Getting a handle on your money isn’t as hard as it seems. There are many tools out there to help you get started including Excel spreadsheets, budget apps, etc. Sitting down for even 10 minutes a week to keep track of all your expenses will help you get a clear idea of your finances.
The benefits of budgeting: The most important advantage of learning how to use a budget when you’re young is that you’ll learn how to handle your money now, when your expenses are relatively low.
You may be getting most of your expenses paid for now, but in 5-10 years, you will have more responsibilities. You will probably be paying for a car, a home, school, maybe even a family of your own. You will have utility bills, taxes, and debt. Learning to take care of your money now will go a long way in ensuring you will be able to manage your finances later in life.
Having a budget puts you in control of your finances and helps you avoid money stresses. It forces you to look at where you spend your money and helps you see where you can cut back.
Step 1: My Income
The first step in creating a budget is to look at your income. Your income is your allowance and/or the salary you get from working.
Knowing where your income comes from is the easy part. Do you have an allowance? Do you babysit or have a paper route? Do you have a part time job after school or on the weekends? Use the following chart to write down all your sources of income.
Now, total up the income portion on your own budget below:
|Sources of income:||Weekly||Monthly||Yearly|