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Money in the Real World

What Is a Budget?

You probably hear your parents talk about the budget all the time. This is a plan that explains where a person’s money should go. Having a budget lets you know what money you need to save and spend to manage your day-to-day life.

Example

Kids with ice cream cone Let’s say you get $10 a week for your allowance. An ice cream cone at school costs $1. If you want to buy one ice cream a day for five days, you will need to budget $5 for your snacks. Then you can use the other $5 on whatever you want!

Adults have to budget for bigger things, like electricity bills, food costs, new clothes, and more. They follow the same steps to do this. They think about how much they have to spend and how much they need to buy to see what sort of money they will have leftover

The Math of Budgeting

Math is a big part of making a budget. Luckily, you know all of that math already! All you need is basic addition, subtraction, and multiplication to create a budget you can stick to. Here is an equation to follow:

(Money you have) – (Money you have to spend) = (What you have left)

That is how a simple budget is made. Figure out what you owe and what you have to find out what you’ll have left.

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