72
Becoming Money $mart
Creating a Budget
After you have tracked your spending for a few weeks, you will see a pattern.
This pattern of spending will help you decide how much you need for movies,
lunch, and other items that you purchase during the week. Once you have an idea
of how much you need for specifi c items, you are ready to create your budget. A
budget will remind you how much you want to spend each week.
To create a budget:
•
Select a time period for the budget, such as one month.
•
List the amounts of income for the period and total them.
•
List the fi xed and variable expenses for the time period and total them.
•
Subtract the total expenses from the total income to fi nd discretionary income.
•
If the discretionary income amount is a negative number, reduce expenses.
Remember that as your income and expenses change, so will your budget.
A budget is a working document. You will want to review it often. There is no
set format for a budget. The one in Figure 3-2 shows a budget for a typical teen.
1. Using your information for income and expenses, create a budget for one
month. Use a spreadsheet program (or write the information on paper if
you do not have access to a spreadsheet). Refer to Figure 3-2 for the column
headings, labels, and types of information you should enter.
2. Save the budget fi le on the hard drive or other storage as directed by your teacher. Use a unique
name for your fi le. For example, if your name is Chad Parker, save the fi le as C Parker Nov Budget.
Each month you will be able to update the budget amounts as needed.
Give
It a
Go
Creating a Budget
Now that you have completed your budget, you have taken a big step in
planning for your future. By keeping track of your income and planning what
you will spend, you will have some control over your fi nances.
Have you heard the saying “pay yourself fi rst”? This saying means that
you should budget for savings before you budget for spending. If you do not
plan to save money in your budget, you probably will not have money left
over to save. Follow the tips in Figure 3-3 to help you stick with your budget.