What is a budget?

What is financial literacy and what does it have to do with you? Sounds like something a grownup needs to know right? The answer is yes, and no. Even kids need to know about money — where it comes from and how you are going to use it. A big part of financial literacy is budgeting. Budgeting means having a plan for how you are going to spend your money. A budget can help you make smart decisions with your money.

Have you ever seen something and you just know you want to have it? Maybe your friend got a new game console, you want new Nike shoes, or you are wanting to go to a special concert or sporting event. Alright! Imagine you have a big jar where you keep all your allowance or money that you get for doing chores, or your birthday money. If you just throw all your money in the jar without thinking about it, you might end up not having enough for that something special. That’s where making a budget comes in.

You know you have some money but you aren’t sure how much. Without that information how are you going to get what you want? To start a budget you need to know how much money you have: How much money do you have in your stash? Start with deciding what to spend your money on. Write it all down. That makes everything real and helps you stay organized! You can make separate categories for different things, like "fun," "saving," or "gifts." Think of it like planning a really fun day. If you just say, "I’m going to have fun today," it’s a little vague, right? But if you make a plan—like, “First, I’m going to the park, then I’ll go to the ice cream shop, and later I’ll play video games”—it’s less confusing and easier to follow. Look at all the stuff you’ve written down. Does it add up to less than or equal to the money you have?

Sometimes, things don’t go exactly as planned. That’s okay, you can always make adjustments. Writing down a budget is like a treasure map for your money. In the end you’ll feel like a money superhero, controlling your cash and making sure it gets to the right places. So grab a notebook or use your phone because the important part is that you write it down. That’s how you keep your money in check and your dreams on track! Learning how to budget when you are young creates a good habit that will last your entire lifetime!