Drawing up a budget should be one of the first things we learn as children. It is important that we understand about spending and saving. A budget is very simple to draw up and you will get it fast. If you are earning money through doing chores and maybe helping people with services, you need to make a budget to keep track of your money. Let’s have a look at how you can start your first budget.
Step 1: Write Down Your Income
Your income is the amount of money you get every month. So, this will be whatever amount you get as an allowance, for doing chores, for selling things, and performing services. Write down each activity that you earn money for or from and the amount that you get monthly next to it.
Step 2: Write Down Your Expenses
As a kid, you probably don’t have many expenses. If you are making things to sell, you should add the cost of the ingredients or materials under expenses. Any other things that cost you money every month should go here. For grownups, expenses are things like buying food, paying for the house, paying for the car, paying school fees, etc. So anything that is like that for you is an expense. Write down where your money goes and how much every month.
Step 3: Compare Your Income and Expenses
You want to always have more money coming in than going out. If more money is going out than you are earning, you will have a problem. You must always try to earn more than you spend. So, subtract the expenses we calculated in Step 2 from the income we calculated in Step 1. If there is a positive amount left, your budget is fine. If you have a negative amount, you need to earn more or spend less.
Your budget will help you see where your money is going and when you need to earn more. It will also help you save money. Ask your parents to help you when you set up your first budget. Have fun!