Have you ever accompanied your parents while shopping and requested them to buy something special for you? Perhaps even a lot of things? You might have been told that you cannot have it right away, or maybe you only received some of the things you desired. What do you do in such a situation?

Naturally, one option is to save your money in order to buy something you did not receive as a gift. To make a wise financial decision and determine how to go from your current financial state to where you want or need to be, you will require a plan.

We refer to such a financial plan or roadmap as a budget. Essentially, a budget is just a simple written plan for how to allocate the money you earn.

Do you earn any income? If you earn money by doing chores or receive an allowance, that counts as income. The money you receive as a gift on your birthday? That is also considered income.

You also have expenses. Expenses are the items you spend your money on. Expenses can be categorized as wants and needs. Needs are the items you require to survive, such as food, clothing, and shelter. Wants are things that would be nice to have but are not necessary for survival.

It can sometimes be challenging to differentiate between wants and needs. For instance, what about dining out at your favorite restaurant? It involves food, which is essential for survival. However, do you truly need to eat out at that restaurant? A peanut butter and jelly sandwich would meet your need for food. Dining out is likely more of a want than a need.

Most kids’ needs are fulfilled by their parents. Those items on your wish list? They are almost certainly all wants. After meeting all your needs, it is acceptable to spend some of your money on wants.

If you currently do not have enough money to purchase something you desire, you can create a budget to assist you in reaching your goal. First, you need to determine your income. How much money do you currently possess and how much will you receive in the upcoming weeks and months?

Next, you will need to identify your expenses. What do you spend money on? Movie tickets? Snacks? New cleats? Video games? Write down all the items you spend your money on and calculate how much money, if any, you have remaining.

If you earn $10 per week and typically spend $8 per week, you will be able to save $2 each week. If you are saving to purchase a $60 video game, it will take you 30 weeks to save enough money to buy the game you desire.

Does 30 weeks sound like a lengthy period of time? It probably does. You likely want the game now or, at the very least, within a few weeks from now. If that is the case, a budget can truly assist you.

A budget illustrates your income and expenses. In order to acquire the game you desire sooner, you will need to increase your income, decrease your expenses, or do both.

To increase your income, you could perform additional chores or odd jobs for neighbors. For example, mowing a neighbor’s lawn for $10 each week would double your income.

Reducing expenses is often easier than increasing income, but it requires making difficult decisions. If you spend $5 each week on snacks with your friends, you could forgo those snacks and significantly decrease your expenses.

Undoubtedly, it is a difficult choice to forgo snacks with your companions. It is a choice that you must personally make. Which holds greater significance: enjoying snacks with your friends or acquiring the desired game sooner?

Give It a Shot

Are you prepared to enhance your knowledge about budgets? Seek assistance from a friend or family member to engage in one or multiple of the subsequent activities:

Managing Your Finances

Can you differentiate between your desires and your necessities? Take a piece of paper and a pencil, and create a list of all the expenses you have made in the past week. Don’t only consider your personal expenses, but also include the money spent by your friends and family on your behalf. Once you have completed the list, make a new one with two categories: wants and needs. Categorize your recent purchases into one of these columns. What did you learn from this exercise? Do you spend more on wants or needs? If you had to reduce your spending, what could you eliminate? For more tips on budget management, check out NCFL’s Day at Dollar General interactive tools.

Reaching Your Financial Goals

One approach to achieve your financial goals is to establish a budget and ensure that you are not spending more money than you earn. If your budget is unbalanced, you can cut down on expenses. Additionally, you can explore ways to increase your income. Come up with creative ideas for additional sources of income. It is not always feasible to find a better job or work longer hours. Can you brainstorm any innovative methods to maximize your income?

Setting Up a Budget

Ready for a challenge? The best way to understand the benefits of a budget is to create one for yourself. It’s a straightforward process. Simply grab a pencil and a notebook, and get started! If you have access to a computer and know how to create a spreadsheet, you can also create an electronic budget. Depending on the frequency of your income, you can choose to have a weekly or monthly budget. It’s up to you. If you receive a weekly allowance, a weekly budget might be the easiest way to track your finances. Divide your income and expenses into two columns. How do they compare? Are you spending all of your money each week? Write down your financial goal on your budget. If you aim to save money for a specific item, jot down the item, its cost, and the desired timeframe for purchasing it. Based on your income and expenses, calculate how long it will take you to save enough money for that item. For instance, if you earn $10 per week and spend $5 on expenses, you can save $5 per week. If you want to purchase new soccer cleats worth $50, it will take you 10 weeks to save enough money. Discuss your budget with a friend or an adult. Seek their assistance in generating ideas to increase income and reduce expenses, thereby accelerating your progress towards your goal. They might also provide guidance in making wise financial decisions. For example, your parents might have a coupon for the shoe store or know of a sale where the cleats you desire are available at a discounted price. By spending less on the cleats, you can save the required money even faster. Best of luck in achieving your goal! As you grow older, if you remember these fundamental budgeting tips, you will make more informed decisions and be able to save money for various purposes!