07 Apr Your budget
One of the first concepts in handling money is having a budget.
Income = money coming in. Whether your income is money from a job, or an allowance, this is money you have. In addition, you may have some money in your piggy bank (or a real bank), which you may be able to spend.
Expense = money going out. You often have to spend money to pay for things like your mealworm collection, going to the movies or even something basic like food.
A budget is an overview of your income compared with your expenses. It’s your own personal financial plan. Ideally, your budget takes care of current expenses and leaves money aside for savings and your longer term goals. To create a budget to meet your goals, you need to know how much money you have now, how much you earn each week, how much you spend each week, whether it be on fun stuff with friends or a bill you owe (like for that awesome bike you purchased on credit last year).
To have a a firm understanding of what your personal budget is you will need to focus on each of these categories (goals, money you have now, money you earn each week, and money you spend each week) – which (surprise!) are the subject of some of the following posts. The very first step, however, is to set up your goals because how much you spend versus how much you save will all be dependent upon what your personal goals are. So (surprise again!), setting goals is the next post!
Do you have a monthly budget? Have you ever thought about it?