Your child may not have a full-time job or a mortgage. But basic budgeting skills can help him plan spending and set him up for long-term success handling money. Here are six steps to get you started.
1 Help your child determine his income
The first step in building a budget is figuring out how much money comes in. For tweens and teens that means regular income, such as paychecks from jobs and allowances, as well as money given to them on birthdays or holidays. Have your child add up what he receives in a month—that’s his total monthly income.
2 Calculate required expenses
Required expenses are necessary costs you must pay regularly—they’re the must-haves. For a middle or high schooler this could be a monthly cell phone bill, or gas and car insurance if your child drives. Total these costs over a month to determine a baseline set of expenses.
3 Do a little math
Once you have a total for the required expenses, have your child subtract that number from her income. This reveals whether she has enough to cover her necessities, as well as how much money is left over.
4 Talk about the fun stuff
Once you’ve covered necessary expenditures, explain that what’s left can go into your teen or tween’s savings account. She also could use extra funds for discretionary purchases such as going to the movies or buying concert tickets—the nice-to-haves. But remind her that money is finite, and sometimes that means making trade-offs. For example, explain that buying an expensive piece of clothing now may mean postponing a bigger purchase.
5 Help him get what he wants
Tweens and teens may not be able to afford some big-ticket items right away, such as a bicycle or even a car. In this case you can help your child set a savings goal and then plan how to achieve it.
6 Balance the budget
You can teach your child that spending should not exceed income. If your tween or teen overspends, you can help him look for ways to cut back spending or increase income. For example, he may decide to carpool one month to save on gas and use the extra funds to buy a concert ticket. Teens can boost income by taking on extra jobs, perhaps mowing a neighbor’s lawn or babysitting.
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Listing out your expenses, line by line, is a tried-and-true budgeting strategy. Get started by listing all of your monthly expenses in rows. This includes the needs (your rent or mortgage payments, car payments and insurance, cell phone bill, groceries, etc.)
Listing out your expenses, line by line, is a tried-and-true budgeting strategy. Get started by listing all of your monthly expenses in rows. This includes the needs (your rent or mortgage payments, car payments and insurance, cell phone bill, groceries, etc.)
Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals. Let's take a closer look at each category.
The 50/30/20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should be split between savings and debt repayment (20%) and everything else that you might want (30%).
The 7 different types of budgeting used by companies are strategic plan budget, cash budget, master budget, labor budget, capital budget, financial budget, operating budget. You can read about the Union Budget 2021-22 Summary in the given link.
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A budget can also set you on the right path to achieving your financial goals, spending within your means, saving for retirement, building an emergency fund, and analyzing your spending habits.
The most common in my practice is a 6+6 budget; that is, create a new budget that shows six months of actuals and six months of forecasts. If expectations built into the budget aren't materializing, then it's time to recalibrate.
Introduction: My name is Frankie Dare, I am a funny, beautiful, proud, fair, pleasant, cheerful, enthusiastic person who loves writing and wants to share my knowledge and understanding with you.
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