Ready for budget building 101?
How to make your own budget
Downloaded one of those cool budgeting apps from yesterday? Great! No phone? No problem!
You can still build a great budget using good old paper and pencil and a calculator. Let's get started.
First, make a list of all the different ways you get money each month—maybe you have a job or allowance, do chores, help the neighbors, sell dog biscuits, whatever. Then total up the list. Maybe it'll be the same every month, maybe not. Either way, it's called your monthly INCOME. If you don't usually get money, then start selling something. It could even be as simple as lemonade.
Next itemize all the expenses you think you'll have in the month, starting with your financial goal (remember PYF?). Then list categories and the expenses that fall into each category. For example:
• Financial Goal: $35 each month
• Entertainment: Netflix, iTunes, etc
• Food: Lunch, Jamba Juice, snacks
• Transportation: Gas
The total of this list is called your monthly EXPENSES.
Your list of expected expenses will end up being different than your actual expenses—that's why you want to update your budget throughout the month. Track your expenses each week and compare them to your monthly budget.
If your expenses start to total more than your income, you're going to blow your budget. Something will have to wait until you bring in more income or cut your expenses. But now you have the advantage of looking at your expenses as a whole and deciding which ones are your priorities.
In the beginning your budget won't be perfect—you'll constantly be adjusting it. Work on it each day for three months and see what happens. Keep going for six months and see what it does for your financial future. Knowing how to budget will be a gift that sticks with you the rest of your life.
You guessed it—try making your own budget!
Follow our Financial Literacy Month series to get financially fit in just 30 days.
James McKenna and Jeannine Glista are the co-creators of Biz Kid$, a national financial education initiative based on the award-winning public TV series. They also are the authors of the seriously smart new book How to Turn $100 into $1,000,000 (out this month from Workman Publishing, $13), which outlines in detail every step you need to take to make your million.