Back to School Basics: Budgeting

Charlotte Brown: Hello, my name is Charlotte Brown, and this is Ian Tam. Very often when I go to a store, I don’t have enough money for things, and I know there’s a special way to have enough money for things, and that’s called budgeting.

Ian, what’s a budget?

Ian Tam: Hey, Charlotte. That’s a great question. So, a budget is kind of like a special plan that helps you spend your money wisely, just like your cheerleading coach will help you plan out certain moves, a budget will help you plan to spend your money in a more efficient way.

Brown: Can anyone make a budget?

Tam: Yeah, anyone can make a budget. Young people can make a budget, old people can make a budget. The reason we have a budget is to make sure our money is enough to buy the things that we need.

Brown: What should I include in my budget?

Tam: Another great question. There are a few things you want to include in your budget. The first thing is how much you’re earning. So, for you, probably like an allowance. Maybe you do some chores and get an allowance. That’s how much you earn. The second thing is how much you save. Maybe in a particular week you get $10, and you spend $1, so you save $9. You want to keep track of how much you save and over time that savings will hopefully get bigger, and you can buy bigger things as time passes. The third thing you want to do is make sure you set a goal. Maybe you’re budgeting to do something special or maybe you want to budget to buy something. You want to make sure you keep that in mind when you’re creating your budget, and also don’t hesitate to ask for help from your mom and your dad.

Brown: Thank you, Ian. For Morningstar, I’m Charlotte Brown.