2.4 Budgeting
The basic idea behind budgeting is to keep track of the money that you receive and the money you spend.
The goal of budgeting is to make the best use of your money and, to the extent possible, save some money for the future.
Two monthly budgets of a young adult are shown in the tables below. This young adult has a simple financial goal: Save at least £5 every month.
| Money received: | Amount (£) | Money spent: | Amount (£) |
|---|---|---|---|
| Pocket money | £32 | Book purchase | £7.99 |
Money from work (Gardening) | £7 | Eating out with friends | £11.65 |
| Birthday present | £25 | Mobile phone top-up | £6.99 |
| Birthday present | £12 | ||
| Clothes (new shirt) | £19.99 | ||
| Total | £64 | Total | £58.62 |
| Monthly surplus | £64 - £58.62 = £5.38 |
| Money received: | Amount (£) | Money spent: | Amount (£) |
|---|---|---|---|
| Pocket money | £27 | Cinema | £5.99 |
Money from work (car wash and gardening) | £11 | Mobile phone top-up | £6.99 |
| Sale of old clothes | £10 | Eating out with friends | £23.64 |
| New mobile phone case | £6.99 | ||
| Sweets | £2.50 | ||
| Total | £48 | Total | £46.11 |
| Monthly surplus | £48 - £46.11 = £1.89 |
Preparing your own budget
After reading the two example budgets, prepare your own budget for next month based on the money that you received and spent in the past 30 days.
Use the box below (or write down in your notepad) to make notes.
Feedback
You may not remember all the money that you received or spent. You can create a list of categories for Money received on the left-hand side, and another list for Money spent on the right-hand side.
This rough budget may help you to create a more detailed and accurate budget for the next month. It may also enable you to decide how much you are willing and able to save.
There are several mobile phone apps that may help you create your budget.
You will learn about bank accounts in the next session.
Moving on
2.3 How do I start financial planning?
