Why a budget is a recipe for financial success
Flour. Eggs. Sugar. Salt. Butter. Alone, they are all just ingredients. But those same 5 ingredients can be combined in different ways to make pancakes, cookies, a cake, or even a loaf of bread. It all depends on the plan—or recipe—you use.
You can follow a recipe for your money too. That’s called a budget, and it’s a plan that can help you do more with the money you have.
Whether you know it or not, you probably use budgeting skills every day. Have you ever done your homework right after school so you can play video games a little longer before bed? That’s budgeting your time. If your parents give you lunch money for the week, you probably know how to make it last until Friday. Budgeting.
So how do you make a budget? Just like a recipe, it starts with a list. Think about everything you pay for with your own money, and give each item a cost. Do you chip in for the phone bill or for gas? Put that in your budget. Do you have a prom or another big event this year? That goes in your budget too. Be sure to include costs for pocket money, gifts, and savings too.
Then tally what you have for money, including your allowance, paychecks, birthday presents, and whatever else. When you know how much you have, figure out what you can afford on your list. You may have to make choices between the stuff you want and the things you really need, but that should be expected. After all, sometimes a recipe needs a little tweak here and there to make it work.