Understanding Budgeting and Why It's Important
Ever wonder where your money goes?
One second it’s there—poof!—it’s gone. A budget helps you track your money so you’re in control instead of confused.
Budgeting helps you make smart choices about spending and saving so your money lasts—and works for you.
What is a Budget?
A budget is a plan for how you’ll use your money—how much you’ll spend, save, or set aside.
Think of it like a map. Want to get somewhere (like buying that new phone)? A budget shows you how to get there, step by step.
Budgeting helps you make smart choices about spending and saving so your money lasts—and works for you, not the other way around.
Needs vs. Wants
Now that you know what money is coming in and going out, it's time to decide how to spend it.
It can be tricky to tell the difference! But knowing what you need versus what you want is a budgeting superpower.
- Needs are things you must have to live - like food, water, shelter and clothing.
- Wants are things that are nice to have—like the newest sneakers, video games, or eating out with friends.
Understanding the difference helps you prioritize spending.
Can I live without it? > It’s probably a want.
Will something important fall apart without it? > It’s likely a need.
Budget Breakdown - The 50/30/20 Rule
Here's an easy way
to split your money:
50% Needs
things you must have (school supplies, lunch, bus fare)
30% Wants
things you enjoy (games, snacks, hobbies)
20% Savings
for goals and emergencies
Example Budget: If you earn $50 a week from chores or a part-time job:
$25 for Needs
$15 for Wants
$10 for Savings
Why Budgeting Matters
Budgeting isn’t just for adults! Learning it now helps you:
- Avoid running out of money
- Save for stuff you really want
- Prepare for surprises
(like needing new headphones or paying for a class trip) - Build smart money habits early to use all your life!
Balance is the Goal
If your expenses are more than your income, you’re overspending. A balanced budget means you’re not spending more than you earn. That’s financial power!
Real Talk – Budgeting Starts with Tracking
You can’t control your money if you don’t know where it’s going. Tracking your spending is the first step to better budgeting!
Start by figuring out where your money actually goes.
- Use an app
- Write it down in a notebook
- Keep a spending log
Think of your budget as your money map and tracking your spending is your GPS.
If you don’t know where you are, you can’t get where you want to go - financially.
Start building your own budget with our easy-to-use worksheet!
Stay in control by checking your balance regularly and track what you spend. No surprises = no stress!
