Making a budget
With a budget you decide in advance where your money goes: what you spend, what you save and what you give away.
Why
Why is your pocket money always gone before the end of the month, even though you did not buy anything big?
Small spending adds up fast. A drink here, a snack there, an app that costs a few euros every month. Without a plan you only notice your money is gone when you need it.
With a budget you decide in advance where your money goes. You split it into jars: spending, saving and giving. Then you also know how long you need to save for something you really want.
See it
Set your pocket money per month and use the sliders to choose which part you save and which part you give. Watch the three jars fill up and see how many months you need for the €120 headphones.
Description of the picture
A slider for pocket money per month, from €10 to €100, and two sliders for the part you save and the part you give, as a percentage. Three jars, spending, saving and giving, fill up with the amount that goes into them. At the bottom there is a goal: headphones of €120, with the number of months you need to save to be able to buy them.
Get it
A budget starts with two lists. Your income: everything that comes in, such as pocket money, money from a student job or a present. Your spending: everything that goes out. If you subtract the spending from the income, you see what is left.
In your spending you tell fixed costs apart from variable costs. Fixed costs are the same every month, like a phone plan or the membership fee of your sports club. Variable costs change, like snacks, a day out or a present for a friend. You put the fixed costs aside first, because you have to pay them no matter what.
A handy way is to work with jars. You split your money in percentages: for example 70% to spend, 20% to save and 10% to give to a good cause or to someone who needs it. If you save first, the moment you get your money, it works much better than saving whatever is left at the end.
If you are saving for a goal, you divide the amount of your goal by what you save each month. If you do not get a whole number, you round up. Half a month of saving is not enough: after that month you do not have all the money yet.
Watch out with weeks and months. A month has a bit more than 4 weeks. A year has 52 weeks and 12 months. If you get pocket money every week, you count a year as 52 weeks, not as 4×
left=
Worked example
Mats gets €40 pocket money a month. He saves 25% and gives 10%. How much goes into each jar? How many months does he save for headphones of €120?
The saving jar gets 25% of €40.
€40.00×
25: 100= €10.00 The giving jar gets 10% of €40.
€40.00×
10: 100= €4.00 The rest goes into the spending jar.
€40.00−
€10.00− €4.00= €26.00 Divide the goal by the savings per month.
€120.00:
€10.00= 12 - Answer
Save €10.00, give €4.00, spend €26.00. After 12 months Mats can buy the headphones.
Do it
Pick a level. You get a new exercise every time, checked straight away. Amounts to the cent.
Pitfalls
Wrong: I will save whatever is left at the end of the month.
Usually nothing is left by then. Small spending eats up the money before you notice.
Right: Put your savings aside as soon as you get your pocket money. Only then do you spend the rest.
Wrong: I need €10 and save €3 a month, so after 3.33 months I have it.
After 3 months you only have €9. Part of a month does not exist when you save.
Right: Always round the number of months up: here 4 months.
Wrong: €5 a week is €20 a month, so €240 a year.
A year has 52 weeks, not 48. With 4 weeks a month you forget 4 of them.
Right: Per year it is 52×
€5= €260.
In real life
- A youth movement or the scouts get a budget for camp. The leaders first put the fixed costs aside, like the rent for the campsite and the coach, and then split the rest between food and activities.
- Some schools let families pay for a school trip of several days in instalments. That way a family can put a little aside each month.
- With a summer student job you earn a lot of money in a few weeks. A budget helps you spread it over the whole year.
- Students who move into a student room often get a fixed amount per month for food and groceries. With a weekly budget you make it to the end of the month.
History
On 1 January 2002 euro coins and notes came into circulation. Before that, Belgian families made their budget in Belgian francs. For 1 euro you got 40.3399 francs. For a long time people still converted prices to francs in their heads, to feel whether something was expensive.
At the table
Which fixed costs do we pay at home every month, and which costs change from month to month?
A question to talk about together, for parents and young people. There is no wrong answer.