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Setting up a Budget


Making a Budget

Making a budget is the most important step in keeping track of your money. A budget allows you to track your income (the money that you have) and your expenses (the money you spend). By writing down your monthly income and expenses, you can see how much money you expect to have for the month and plan for how much you can spend.


The First Rule of Budgeting

The first rule of budgeting is simple: Spend less than you earn! If you earn $80 a month from working, and earn another $40 from your allowance, your income for the month is $120. So you know that you have to spend less than $120 for the entire month.


Structuring Your Budget

  1. Determine your Income

Estimate all “incoming” money, including earnings from a job, allowance from your parents, and birthday money.

  1. Estimate Required Expenses

Required expenses include any money that you must pay. That may include giving your parents money for your cell phone or chipping in for your soccer uniform or piano lesson. You should also include payment to your savings as a required expense. Whether you are saving for something specific or just tucking money away for the future, it is important that you get in the habit of paying yourself first! Even a few dollars each month helps build your savings.

  1. Estimate What You Want to Spend

After you have paid your required expenses, you can use the money left over for some fun! These expenses may include clothes, shopping, pizza, video games, gifts, and any other items that are considered “optional.” Review the following Sample Budget, and then make your own monthly budget using the worksheet below it. Stay within your budget, pay yourself first, and you will always be in control of your money!


Sample Monthly Budget  

Income

Estimated Amount

Actual Amount

Allowance

$40

$40

Money from working

$30

$30

Gifts

$10

$20

Income Total

$80

$90

Expenses

Estimated Amount

Actual Amount

Savings

$20

$20

Cell phone

$10

$10

Clothes

$15

$12

Video games

$10

$0

Snacks

$10

$18

Movies

$15

$12

Expenses Total

$80

$72

Income Minus Expenses

$0

$18

Download a copy of this sample here.

Monthly Budget Worksheet

Income

Estimated Amount

Actual Amount

Income Total

 

 

Expenses

Estimated Amount

Actual Amount

Expenses Total

 

 

Income Minus Expenses

 

 

Download a copy of this worksheet here.