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what is budgeting?
what is budgeting?
In simple terms, Budgeting is like making a plan for your money. Just like you plan your day or week, a budget helps you plan how you'll use your money.
It involves setting financial goals, estimating income and expenses, and allocating resources to meet your objectives. Budgeting helps individuals and households track their finances, prioritize spending, and make informed decisions about how to use their money effectively which is a great habit to start from an early age.
reasons why to budget
be able to know where your money is going: With a budget, you keep track of your money. You know how much you get, how much you spend and how much you can save!
Set goals! You can decide what you want to do with your money. Whether it's saving for a toy, a trip, or something big like a car, a budget helps you reach your goals.
control spending: spending on impulse buys is something that even the best of us do but having aa consistent budget helps you decide how much you should spend on different things. It helps you avoid spending too much on things you don't really need like those shoes that everyone in your class is currently obsessed over [they die out a couple months later anyway!]
Be Ready for Surprises: Sometimes unexpected things happen, like a broken game set or maybe you forgot a friend's birthday [I've done that too many times to count] . A budget helps you save a little money for surprises so you're ready when they come up.
Pay Off Debts: If you owe money, like a ticket your friend covered for you, a budget helps you set aside money to pay it back bit by bit.
Feel Safe: Knowing you have a plan for your money makes you feel good. It's like having a map to follow so you know where you're going.
Have more experience in dealing with how much money you recieve and how much you spend as it helps you set up for the future where having this disipline can help you so much.
think of it like a cake!
50/30/20 rule
50/30/20 rule
A lot of you guys may receive a weekly amount of pocket money from your parents if you’re in high-school, if youre older then you probably have a job and get a monthly wage. or maybe your parents just give you money whenever you need it, no questions asked [ im jealous ]
whatever that amount may be, the best way in starting to build smart habits is splitting that amount into 3 slices
50% go towards your needs and daily necessities and this for you may be for food when you're going out or bus tickets, maybe some new school shoes etc.
30% goes towards your savings. maybe you have been wanting an expensive game for a while but your birthday is months away and Christmas or any holiday event is even further. so why not save up and get it yourself? over time that small percentage you save multiplies and increases allowing you to reach enough to get the end prize. Or maybe it's a friend's birthday that you completely forgot about and need to buy a present last minute so it's great to have some savings for emergencies like this!
20% is for your wants. Things that you don't necessarily need but are impulse-buys like confectionary!
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