Money is important, because it is one of the major ways we get what we need and what we want. If we don’t manage the money well, though, we lose it. That is why we need to carefully plan how we use our money. “But how?”, you may ask. That’s where budgeting comes in.
What is Budgeting?
Budgeting is when you carefully plan what you’re going to spend your money on. A budget includes wants, needs, and tithing. When budgeting, you also write down what you buy to keep track of what you’re spending. This is google’s definition of a budget:
noun: Budget; plural noun: Budgets
An estimate of income and expenditure for a set period of time.
Why is Budgeting important?
A budget is important to stay organized and avoid over-spending and debt. Even the richest people in the world spend their time budgeting and planning. If they didn’t, they wouldn’t be the richest people in the world! :) (BTW, debt means to owe money to someone. Usually the “someone” is a bank, but people can loan you money too.)
How can you start Budgeting today?
Here’s how you can start a budget:
Get a blank piece of paper, and write the amount of money you’ll be getting each month. (For you, this could be your allowance or money from your business.) Then, divide the money between the following categories:
- Tithing – In my church, we give 10% of the money we make in tithing.
- Needs – This could be lunch money or clothes, but when you’re an adult, needs will be food, clothing, a home, and bills
- Wants – Things you desire, like an electronic gadget or toy, would be in this section. Things I want would be Littlest Pet Shops, books, or dolls.
If you have a business, you’ll want to include supplies to make the product you’re selling in the needs section. An example: Let’s say your company sells bracelets, earrings, and necklaces. The supplies you need would probably be charms, beads, string, etc.
Two terms you’ll read when researching budgeting are variable and fixed expenses. Variable expenses are things you don’t need all the time, while fixed expenses are things you do need all the time.
Budgeting and Money Tips
Remember always to pay your tithing first. You will reap many blessings from The Lord if you do. Saving money for a rainy day is an old saying that means you should save money until you really need it. It’s also important to not spend money you don’t have, or you will end up in debt.
It is good to start good money habits such as budgeting when you are young, so that you don’t over spend when you’re older. As Dave Ramsey says, “A budget is telling your money where to go instead of wondering where it went.”
I hope this post helped you understand the basics of budgeting, why a budget is important, and how to make a budget. For more amazing information delivered to your inbox each day, please subscribe!
Be an example!