A budget is a tool used to manage your money.  Using one helps you to figure out where your money is going and where you want it to be going.  Sometimes those are two different things.  For example:  Let’s say that you have to pay for your cell phone bill that costs $30.00 a month. You are making $40.00.  When you go shopping one day, you buy a video game for $20.00.  This leaves you $20.00, not enough to pay for the cell phone bill.  This means that you aren’t balancing what you owe with what you want.  In this case, you might even have to pay extra charges on the cell phone bill because you don’t have the money to pay on time.  You need a budget so that you can plan what happens to your money.
     We’re going to assume that you read about spending, earning, and giving already.  Your head knows about good choices; you just haven’t made that many.  Each time you get money, you either spend it on things you don’t need, won’t remember, or owe it to someone you borrowed money from when you ran out.
     Don’t think that budgets are only for people making a lot of money.  It is just as important for you to have one if you earn only a small amount.  Look at the budget below.  The left hand column lists what you owe, how much you would like to save, and how much you would like to give to a good cause.  Saving can be for something you like, for emergencies, for college, or just because you always want to have some money in your bank account.  The right hand columns list any money you will earn for the month.  It also subtracts expenses from the money you earn.  The older you get, the more money you will probably earn.  For example:  When you are young, babysitting or lawn mowing are jobs that you can do.  When you become 16 or 17, you can get jobs working in stores, gas stations, or other places that pay more money. 
     Along with earning more money, you will have higher expenses, too.  If you have to drive to work, you might have to pay for gas.  You might need special clothes for the job.  Your parents may expect you to pay for Christmas presents, birthday gifts, clothes that you want (not need), shoes, cell phone bills, credit cards, or other things from the money you earn.  Think of each thing you need to pay as a bill that you will need to pay by a due date.  If you get bills such as credit cards, they should be written on the left hand column along with the amount you owe.  Credit card companies will charge you about $30.00 just for being late sending the payment.  

A budget is used to plan for money that you expect to earn, for expenses you expect to have, and for things you want to do or buy.  You will see that in our sample budget, this person had a plan for saving and giving.  The sample lists bills and expenses that will need to be paid.  At the bottom of the column is the total of savings, giving, and expenses.  The right hand column lists where the person is going to work, or what he/she will do to earn money, and the amount he/she expects to earn.

      This is totaled toward the bottom of the column.  Under that is the total after all expenses have been subtracted from how much was earned.  This sample shows that there will be money left over after all expenses have been paid.  That doesn’t always happen.
     Sometimes we don’t earn enough to do all of the things we want to or buy all of the things we like.  If this had happened in our sample, then decisions would need to be made BEFORE all of the money was spent and the person couldn’t pay his/her bills.  If you use the budget spreadsheet that we include, all of the totals will be done for you.  If, at the end, you have a negative amount at the bottom of the page, it means that you are spending more than the money you will make.  Since you can’t spend more than you have, you need to decide how to fix it.  The best way to do this is to figure out what is least important to you.  Can you watch a movie at home or at a friend’s house instead of going to the movies?  Can you buy a smaller amount of food at the movies if you go?  Delete the unimportant things until your total expenses are less than what you will earn.   If that doesn’t work, look at the earnings column.  Can you baby-sit more?  Can you wash your parent’s car?  Look for ways to earn more.  When you are done, the budget needs to be balanced which means that you earn enough to pay for your needs.  Then you figure out if you can afford to buy things that aren’t needs.
     Once you have created your budget, you might have to rework it.  Sometimes we try to save a lot of money right away and forget that we need to buy pencils or other small things that seem to add up.  People who use budgets will sometimes put an ‘extras’ amount for all of those things.  The most important thing is to watch what you spend before you make your budget.  Making a realistic budget is important because it won’t work otherwise.  If you run out of money because you spend it without writing it down on your budget, you will think it’s the budget that doesn’t work.  Actually, it is caused by not writing down realistic expenses OR realistic pay.
     The decisions aren’t always easy but a budget lets YOU control your money and not let it control YOU. 

More Piggy Pages

Money game

Money matching game

Money crossword puzzle

Activities

Budget template in Microsoft Office Excel

Fun Fact

In the 1700s, Quebec soldiers didn't get their shipment of money so that they could be paid. While they waited for the money to come, they used playing cards as cash.