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Creating and Using a Budget
A personal finance plan can help you keep track of where you spend your money, how much you’re saving, and how to plan for the future. This financial plan is called a budget.
Your budget lets you see how much money is coming in, how much is going out, and how you can put some aside, saving it for future goals you would like to enjoy. To create a budget, you’ll need to know two important words:
- Income – This is the money you receive from all sources. Your income can be your paycheck, Social Security check, money you receive from a trust, or cash gifts from friends and family.
- Expenses – This is all the money
you pay out. It can be for daily or monthly expenses, whether
you pay with cash or write a check. Daily expenses can include
things like coffee, video rentals, and gas. Monthly expenses
are usually for things you pay for once a month, such as
rent, utilities, or a car payment.
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Creating a budget can help ensure you have the money you
need to pay for food, housing, transportation, and other expenses.
Plus, your budget can help you reach other important goals,
such as attending college, owning your own home, and eventually,
retirement. To develop a budget, you need to:
- Identify your income
- List all of your expenses
- Compare your income and expenses
- Make changes
Begin by making a budget for a month at a time. As you gain
more experience, you can make a plan that covers more time,
such as six months or a year. Set aside a little time to print
off and complete the following worksheets, designed to help
you create a budget and stick to it.
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