How to Budget Your Money (explained in 2 minutes)
What a budget is, income and expenses, needs and wants, saving first, and a worked example: Leo plans his weekly money for lunches, fun and savings.
- Subject: Life skills & Business
- Age group: 10-14
What this video covers
- Budgeting is a plan that connects money coming in with money going out before spending.
- A budget assigns money to needs, wants and a future goal.
- A weekly budget begins with total income and separates needs from wants.
- Savings serves a future goal, and all budget groups together must stay within income.
- Leo's example assigns thirty dollars to weekly lunches and bicycle savings.
- Leo assigns the remaining money, checks the total, then spends two dollars from fun.
- After spending two dollars, Leo has five dollars left for fun and must not take needed lunch money for an expensive game.
- When a need costs more than expected, the budget protects it by changing or delaying a want.
- Extra money can be divided among a goal, a need and fun, and budgeting is a choice made ahead of time.
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Transcript
Budgeting means making a plan for your money before you spend it. Money coming in might be an allowance, payment for a job, or a gift. Money going out pays for things.
A good plan gives every dollar a job, so you can cover what you need, enjoy some wants, and work toward a goal instead of wondering where your money went.
Begin by finding your total income for the time you are planning, such as one week. Then name your expenses. Needs are important things, such as transport or school supplies. Wants are enjoyable extras, such as games or sweets.
Savings is money you keep for a future goal. Put the income at the top, choose an amount for each group, and make sure the amounts together do not cost more than the income.
Here is a worked example. Leo gets thirty dollars each week. He plans ten dollars for school lunches, because those are needs. He puts eight dollars into savings for a bicycle.
He chooses seven dollars for fun, and keeps five dollars for surprises or giving. Ten plus eight plus seven plus five equals thirty, so the whole amount has a job. On Tuesday, Leo buys a two-dollar snack for fun.
He subtracts two from seven and knows that five dollars remains for fun that week. If he wants a nine-dollar game, he must wait, choose something cheaper, or use money from a later week; taking it from lunch money would leave a need unpaid.
If a bus ride costs more than expected, change a want or delay it.
If you receive extra money, you can split it between your goal, a need, and fun. A budget is not a punishment; it is a choice made in advance.