Question: Do you need a budget?
Answer: No, you already have one!
Complete Answer: Simply put, a budget is how you spend your money. If you receive money (income) and spend money (expenses) you have a budget.
I try not to use the term budget because it has such a negative connotation, i.e. “that’s not in the budget”, “I can’t buy this or that”, “I can’t buy fun stuff because fun stuff is not in the budget” etc. I prefer the term spending plan. As the name implies, a spending plan is how you plan to spend your money.
So what is your spending plan? Would you be able to clearly explain to someone your income and expenses for the month?
Financial Literacy Knowledge/Skill: You should be able to describe your spending plan for one month. For example, “This is the amount of money I take home (income) each month and this is how I spend the money (expenses).”
Comments or Questions: Thank you for visiting the Financial Literacy Life Skill site. Please feel free to submit comments and questions you may have about managing your money (Financial Literacy).
Next Week’s Topic: “How do taxes affect your spending plan?”