Master These Basic Budgeting Tips During Financial Literacy Month
By Julie Flanagan
If you find it difficult to build up your savings for something you want to buy or end up spending your money on things you never intended to purchase, Infoplease is here to help! April is Financial Literacy Month and now is a good time to improve your saving and budgeting skills. Become more financially literate by learning to manage your money and you'll be more successful in the future.
Whether you dream of backpacking across Europe, buying a car so you no longer need to rely on someone else to take you places, or owning that next awesome gadget, you’ll need money to accomplish these goals. With some financial planning you can help make these dreams a reality. Even if you don’t have a material goal in mind, putting away money regularly is a great way to ensure you’ll be able to make plans and keep them.
A Budget is Simply a Plan
First and foremost, what exactly is budgeting? According to Investopedia, a budget is a "spending plan" or “an outline of anticipated income and expenses that can be used to track actual cash flow and set spending goals.” In short, it’s a way to insure you don’t spend more than you have and avoid spending more than you need to. Below we have gathered a few tips and ideas to help you create your own spending plan.
While the idea of budgeting may sound overwhelming, it’s really just knowing what money you have coming in and being mindful of what money goes out. A well-designed budget allows you to make the most of your money. It will also help you get rid of wasteful spending while having money to pay for expenses that are important to you. Start off by keeping a money spending journal. Every time you spend money, make sure to write it down to keep track of how much and what you are spending money on. You might just realize that your daily trips to the vending machine just aren’t worth it. Rethink your spending and bring your own snacks from home and put that money you aren’t spending into your savings.
Wait—Just How Much Money is Coming In?
The first thing you need to do is figure out how much money you make in a month. For some this may be a regular income from a part time job and for others it may be in the form of an allowance. You also need to factor in money that you receive on a non-regular basis such as holiday or birthday gifts. Calculate what you receive as a monthly income to figure out what you can afford to spend and how much you can put into savings.
Yikes—How Much Cash is Flowing Out?
Most likely, you have regular expenses that are just necessary. These are commonly referred to as your ‘fixed expenses’ which is “any expense that does not change from period to period". Whether it’s your cell phone bill or gas for the car, there are some needs that are just unavoidable. Total these costs over a month.
Once you have calculated how much money you make every month plus how much you must spend on your fixed income, you can now determine how much of your income you have left over. Now you can decide how much money to put into savings and how much you can spend other expenses that you WANT to spend money on, like clothes or concert tickets. By becoming more aware of where your money comes from and being mindful of how and where you are spending it, you will be well on your way to achieving a healthy relationship with money. For more information on setting a budget visit pbskids.org. Also visit usnews.com for recommendations on fun apps that will teach you about money skills.
The Key: Building Your Savings
Many people think that increasing income is the only way to grow their savings, but reducing your expenses has the same effect in allowing you to build your bank account. Here are a few tips for how to build up your savings:
- Find Events That are Free to Attend.
Check your local library for fun events that won’t cost you a cent. Some host knitting, book, and coding clubs. Or host game a game night or rent movies to watch at your house with friends instead of expensive movie outings. Also, check internet sites for postings of free events in or near where you live. Sites like mommypoppins.com and timeout.com are two amazing spots that post monthly calendars of events for tweens and teens.
- Curb Impulse Buying.
Next time you are at the mall and see a pair of shoes you just have to own, think twice and resist the urge to immediately pull out your credit card to buy them. Recognize your Need vs Want spending and remind yourself of the savings goals you have set for yourself. Pretty soon you will start to recognize that you don’t NEED most things you see while you are out at the mall and what you have now it perfectly fine
- Look for Odd Jobs.
You may not be old enough or have the time to devote to a part time job, but that doesn’t mean you can’t look for small jobs around your neighborhood to do. Ask neighbors if they need their lawns mowed or dogs walked. See if your teachers are looking for a babysitter on the weekends. There are always odd jobs people would be happy to pay someone to help them out with!