Learning to Budget

A budget is a plan for how you’ll spend your money. To create one, you divide your income (the money you get) into your expenses (the things you buy).

Your income probably falls into one of these categories right now:

1. You earn a regular allowance—A steady flow of money makes creating a budget easy.
2. You get paid for chores every once in a while or get money as occasional presents—It may be easier to create a budget if your income is a bit more regular. You may want to ask your parents if you can get on a chore schedule.
3. You don’t earn any money right now—That’s okay. You can still learn the basics so you’re ready for when you do.

Once you know how much you make, you’ll need to divide your money into three lists: Needs, Wants, and Savings.

Your parents or guardians probably pay for most of your needs (the things you need to live like food and water).

Wants are fun things like treats, games, or anything else you might want to buy. While you surely have lots of wants, you can’t buy everything. You’ll need to decide what you want the most.

If you want something big, you may have to save toward it for a while. That means deciding not to spend money now and putting it away for later.

Once you have your list of things to buy, try to make a guess for how much each one will cost. For example:

• Ice cream cone: $5
• New swimsuit: $10
• Video game: $50

Then you divide your income into those things. For example, maybe you plan to spend $5 every time you get your allowance on ice cream, and then you save $2 toward a swimsuit and $5 toward a video game. And ta-da, you have a budget! Now, you’ll just have to keep to it every time you get money.

Your budget won’t stay the same forever. You may start making more money. You may have to pay for more expenses. You may decide you want to save for something different. Your budget will need to grow with you. Eventually you’ll move from specific wants to more broad categories like “clothes” or “games.” For now, practice the idea of deciding how you’ll spend your money before you get it.