Kid's Overview

Budgeting is something that you should want to understand and be able to work it to your advantage. Once you know how to budget, you will be able to plan for things that you really want or need. This is something that you can use now and will definitely help you later in life and business.

Budgeting Basics

Budgeting is about sitting down and figuring out how much money you have (or will have) and how much you plan to save and spend. 

Budgeting is about setting priorities. What if you have $50.00 to spend and you see a video game for $45.00 , a music CD for $18.00, a book for $12.00, a pair of pants for $30.00 and  lunch for $5.00.  You will quickly realize that once you do the math of 45.00+18.00+12.00+30.00+5.00=110.00, you don't have enough money. If you were to buy the video game right a way, you could only buy lunch after that. If you were to budget, you would plan for your $50.00 dollars and figure out how best to use it.

Assume you had $50.00 to spend but it had to cover meals for a few days. Imagine if you were left alone at home for a Friday night and a two day weekend and you were given $50.00 for food (assume there is no other food in the house).  If you phoned the pizza place on the Friday night and ordered a few pizzas for a pizza party, it might cost $30.00. You quickly realize that the remaining $20.00 has to last you for the rest of the weekend. You could have a great party and spend the whole $50.00, have a great time, but probably regret it as you got real hungry without food on Saturday and Sunday. You will find that a little  budgeting would have helped you  plan the weekend a little better.

If you take this type of approach and apply it to running a household you will realize that it takes budgeting to ensure that you have the money to buy food, clothing, house, car, entertainment, sports equipment, books etc. There has to be enough money to cover the things you buy.  That is the basics to budgeting.

Imagine what it takes to run a business and how important it is to plan how you use your money. Take the  pizza example of spending the money  you have for two days in the first day and apply it to a business situation; the business would basically have to close the second day if it didn't have the money to operate. 

                                                           Budget Example

   Budget Item             Jan             Feb              Mar             Apr             May

Allowance                     20.00       20.00          20.00         20.00             20.00

Job - paper route        45.00        45.00          45.00         45.00            45.00

Job - odd                        0.00           0.00            5.00          15.00            25.00

  Total Revenue           65.00        65.00          70.00          80.00           90.00

Expenses:

Movies                            20.00       20.00          20.00        20.00            20.00

Books                             15.00       15.00          15.00          15.00           15.00 

Music                              18.00         0.00             0.00          18.00             0.00

Gifts                                10.00          0.00           15.00            0.00             0.00 

Misc.                                  

  Total Expenses         63.00         35.00        50.00          53.00           35.00

Surplus/(deficit)             2.00         30.00         20.00          27.00            55.00

Savings  Balance           2.00        32.00         52.00          79.00        134.00

Basically, if you list the ways in which you will receive money and the ways in which you would like to spend money, you will have a budget. It is also important to list your actual revenues and expenses to compare to your budget and to see where your money went. This will help you plan in the future and help you realize were you actually spent your money.

 More to come!