Bobby, Chloe and Elisha have been given a school project all about money!
They are going to write a pop song full of top money tips, but first they need to learn a thing or two…
Budgeting is just a way of planning ahead!
A budget is a plan that balances money coming in (income) with money going out (expenses).
To make a budget, first add up all of your income—for example, money you earn from work, an allowance, or even birthday or holiday gifts. That’s the amount of money you have to spend or save.
Then, add up all your expenses—the money you plan to spend on things you need or want. There are lots of things you might want to buy, but you know you can’t have everything you want.
Your parents probably make budgets each month.
They work out how much money they have coming in from their jobs, and how much will be going out.
So they know exactly what needs to be spent on things like the house and food.
And what’s left over can be spent on their lovely children, right?
Sadly there’s other stuff like bills that need to be paid. Not just gas and electricity – for example, your Dad might have bought a new car last year and each month he pays some money towards it.
Some goes into a savings account for unexpected things – like replacing the washing machine if it breaks – or for your summer holiday! Mum and dad have to make sure there’s enough money for all those things.
It’s just a way of adding up all the money you expect to come in and thinking about what needs to be spent or what you’d like to spend – and planning ahead so you can make it happen.
So… what happens if you create a budget… add up all the ins and outs… and then realise that you don’t have enough for everything?
Mmm tough one. You have to figure out if there are some things you can do without!
Budgeting might mean making choices.
What if you see a really cool offer you weren’t expecting?
You need to check that the offer really is as great as it sounds and that it’s something you really need or want.
If it is, maybe budget for it instead of buying it straight away!
You can hear Money Matters with the Co-operative Bank every weekday morning from 8.30am!