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     MONEY CENTER: Economic Empowerment Initiative

budgeting
 
— A collaboration between CFY & the Children's Aid Society's Economic Empowerment Initiative.
 
For information about the Economic Empowerment Initiative, please contact CAS
  Lesson 2
 
WHAT YOU WILL YOU LEARN IN THIS LESSON
1. How to create a personal budget.
2. How to balance your budget.
3. The meanings of shortage, surplus, and opportunity costs.
   
   
 
         
       
       
       
     
         
Question:

Thanks for helping me with my budget in the Lesson 1! I almost have enough for my camera now, and my dad's been really happy to see me every month.

What about you? Do you have a budget yet? If you don't, you better get busy! Use the worksheet below to get started.
   
 
MY BUDGET
INCOME from job and/or allowance: $
Expense #1: $
Expense #2: $
Expense #3: $
Expense #4: $
Expense #5: $
Expense #6: $
Expense #7: $
SAVINGS: $
TOTAL:  
To print this budget worksheet click here!
   
 
 
 

How much were you able to save??

Do you know that the average American saves only 5-6% of their monthly income? I think you are better than average!! Try to save at least 10% of what you earn.

  
 
 
         
       
       
       
     
         
   
 

How to figure out what 10% of your income is (the amount you should be saving)…
1. Add up the amount of money you earn every month from your allowance or job.
2. Divide that total amount by 10 (or multiply it by 0.1).
3. That answer is 10% of your income-in other words, the amount you should be $AVING!
 
Examples:
* If your monthly income is $50, 10% of it is $50 / 10 = $5. So, you should save $5 every month.
* If your monthly income is $35, 10% of it is $35 / 10 = $3.50. So, you should save $3.50 every month.
* If your monthly income is $1,250.00 (this is for adults), 10% of it is $1,250 / 10 = $125. So, you should save $125 every month.
   
 
 
* A budget is balanced when income equals expenses plus savings.
* A budget shortage means that you do not have enough income to cover your expenses.
* A budget surplus means that you are making more money than you are spending. Good job! If you make more than you spend, go ahead and put that extra money into a savings account.
 
         
       
       
       
     
         
   
 
 

What can you do if you have a budget shortage??? Hint: You have THREE choices!
 
       
       
     
     
   
       
   
 
         
       
       
       
     
         
  Answer:
 
  You can:
1. Cut your expenses (don't spend as much)
2. Increase your income (make more money) or
3. Use your savings.
   
 
   
 

 

There's one more thing you need to know when you're thinking about making a budget that REALLY works. Sometimes buying or doing one thing stops you from buying or doing another thing. For example, if you have $10, you can either go to the movies or buy a new CD. The opportunity cost of going to the movie is not buying the CD. See how this works??

Opportunity costs can also be applied to time. So, if you have 2 hours, you can either spend that time studying or spend it watching TV. The opportunity cost of watching TV is not studying. (You could also split up your time so you spent 1 hour watching TV and 1 hour studying.)

 
 
 
 
         
       
       
       
     
         
   
 

A budget is like a piece of clothing that you design for yourself: The better it fits, the more comfortable you are, and the better you look!!!

When you're creating your budget, make sure you consider fixed expenses (needs), discretionary expenses (wants), and opportunity costs. A good budget will fit right, even though it might not feel right immediately.

 
 
 

 
       
       
     
     
   
       
     
 
         
       
       
       
     
         

A budget helps people from spending more money than they earn. Try to keep your budget balanced so that your income equals expenses and savings.
  CLICK THE ARROW TO JUMP TO LESSON 3
 
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