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Money and Finance

Money and Finance

Budgeting Money

Every time you spend your money you make a decision. Is what I'm buying worth the cost? Making the right decisions with money can be difficult. Sometimes it is a lot easier to spend your money than it is to make it. One way to help us spend our money wisely is by using a budget.

What is a budget?

A budget is a plan on how you will spend your money. You keep track of money you earn and things you want to buy. Then you plan ahead of time what you can buy based on how much money you will earn.

Why is a budget important?

Budgets are important to help us save money and to keep out of debt. As you get older, expenses and income become more complicated. You may have a mortgage, kids to feed and clothe, a car, vacations, investments, taxes, and all sorts of other things to keep track of. It's difficult to manage all of this stuff without a budget.

Figuring Your Expenses

The first thing to do when setting up a budget is to figure out your expenses for each month. Write down things that you can't do without. This list typically includes things like housing (rent or a mortgage), clothes, food, gas, insurance, car payment, and utilities (heating, water, etc.). Figure out about how much you spend each month on each of these. Then you can add in other things you spend money on like going to the movies or buying video games.

Figuring Your Income

Next, you need to figure out how much money you make each month. This is usually a little easier as most people just get income from their job.

What is your budget?

Now figure the difference between your expenses and your income. Hopefully, you have more income than expenses. If not, then you need to figure out ways you can cut back on your expenses. You need to budget your expenses to be less than or equal to what you make.

How much do you want to save?

A budget can be helpful in saving for something special. Maybe it's a new car or a vacation to the Bahamas. By using a budget, you can figure out how much you can save each month.

Let's say your basic expenses are $1000 a month and you make $1500. This means you have $500 extra each month. You could spend this on other stuff or you could save it . If you need $2000 for that vacation next summer, then you can budget to save $200 a month for the next 10 months. In 10 months you will be having fun in the Bahamas.

Spending your Money Wisely

A budget can help you to spend your money wisely. Keeping track of everything you spend can help to keep you out of debt. It can also help you to buy those special things you really want rather than wasting your money on spur of the moment spending.

Interesting Facts About Budgeting Money

Learn More about Money and Finance:

Personal Finance

Budgeting
Filling out a Check
Managing a Checkbook
How to Save
Credit Cards
How a Mortgage Works
Investing
How Interest Works
Insurance Basics
Identity Theft

About Money

History of Money
How Coins are Made
How Paper Money is Made
Counterfeit Money
United States Currency
World Currencies
Money Math

Counting Money
Making Change
Basic Money Math
Money Word Problems: Addition and Subtraction
Money Word Problems: Multiplication and Addition
Money Word Problems: Interest and Percent

Economics

Economics
How Banks Work
How the Stock Market Works
Supply and Demand
Supply and Demand Examples
Economic Cycle
Capitalism
Communism
Adam Smith
How Taxes Work
Glossary and Terms

Note: This information is not to be used for individual legal, tax, or investment advice. You should always contact a professional financial or tax advisor before making financial decisions.

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