Money in the Real World

How to Budget

Many adults still don’t know how to budget, and that is why they get into trouble. If you can learn this skill now, you are going to be set when you get older! Here is a guide showing how to budget:

Step 1 - Calculate Your Income

Your income is the amount of money you make. For an adult, this is money that comes from a job. For you, this may be money you get from your allowance or doing chores around the house. Add up the money you make for a whole month so you know what you’re working with.

Step 2 - Add Up Your Bills Little girl with piggy bank
You may not have any bills right now, but you will someday. These are payments that you have to make for things that you use all the time. In your case, this may be something like lunch or snacks at school. Figure out how much money you need to spend on these things so you know how much money to save. This is the most important part of making a budget.

Step 3 - Make a Plan

Once you know how much money you have and how much money you need, make a plan for that money. Let’s go back to the ice cream example. If you know that you need $1 per day for your ice cream, you will need to save $5 for that week. This is a plan that you have for your ice cream money and nothing else. In the future, that might be a new car, a house, or even a pet. You just have to make sure you budget for it.