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More on Money
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Budget
Learn How to Write a Balanced Budget to Help Plan for the Future
checkbook
Writing Checks

Student Budget:
This sample budget records a student's monthly income and outgo.
Monthly Income
Allowance $20.00
Job (mowing the lawn) $10.00
Job (babysitting) $10.00
Birthday gift $15.00
Total Income $55.00
Monthly Outgo
Savings Account Deposit $15.00
Donation to Charity $5.00
Movie $5.00
Candy $3.00
Video game $27.00
Total Outgo $55.00
A budget is a written account of all income and expenses for a person, a family, an organization, or a government. People use budgets to figure out how much money they take in and plan how much they can spend and save. A budget gives you a big picture of your income and necessary expenses, and lets you know how much you can afford to spend and how much you should save.

Although large organizations need to operate according to a budget, most people do not. It is a good idea, however, to occasionally write down your budget so that you have an idea of how much you are making, how much you are spending, and most importantly, how much you are saving for the future. Students need to realize at an early age that they should spend less than they make, and that saving money for their future is very important.

Adult Budget:
This sample budget records an adult monthly income and outgo.
Monthly Income
Income (after taxes) $2000.00
Interest from Savings $200.00
Total Income $2200.00
Monthly Outgo
Savings Deposit $200.00
Donations $100.00
Rent $800.00
Electricity/Gas $100.00
Water/Sewer $50.00
Insurance $100.00
Transportation $150.00
Phone $50.00
Food $400.00
Clothing $50.00
Entertainment $100.00
Other $100.00
Total Outgo $2200.00
Long-term and Short-term Savings: There are different types of savings: short term and long term.

Short-term savings are savings used to buy items in the near future (for example, saving money for a few weeks to buy an expensive video game).
Long-term savings are savings used to buy things that will be needed in the future (for example, saving money for years to go to college).

How Much Should You Save?
How Much Can You Spend?
:
In order to know how much you can afford to spend and how much you should save, you need to have a big picture of your finances. A budget gives you that big picture.

For adults, many expenses are necessary (including shelter, food, water, and electricity), but some are discretionary (not necessary expenses, including entertainment, eating out, and hobbies). For students, most expenses are discretionary.

Different people save different amounts of money. The amount saved depends on many things, including emergency expenses and future monetary needs that you anticipate. Some financial advisors suggest that adults save 10% of their income; some suggest that you save more. For students, one suggested amount is allocating about one-third of income toward long-term savings (deposited in a savings account), one-third of income for short-term savings, and one-third of income for spending now.

One way to encourage savings is to show the student how savings accumulate and compound over the years. For example, if the student saves $20 each month and puts it in a savings account earning 5% annually (compounded daily), the student will have $266.12 after one year, $1386.15 after 5 years and $3140.29 after 10 years.

Printable Activities on Writing and Understanding Budgets:
Budget

Write a Four-Week Student Budget

On this printable worksheet, the student writes a budget for four weeks, recording income (from allowance, jobs, gifts) and outgo (savings, donations, wants, and needs).
Budget

Write a Monthly Renter's Budget

On this printable worksheet, write a budget for a month, including necessary and discretionary expenses.


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