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Budgets Are a Biz Kid’s Best Buddy Budgets are easy to talk about–but hard to stick with! Find out how to make a budget–and how to follow it, even when there are a million ways to spend your money. It’s all in The Vault, brought to you by Biz Kid$!
What Is a Budget? A budget is a plan for your money. The first step is to figure out your income and your expenses over a certain time period. Then, you adjust those amounts to fit your goals. Keeping to a budget means making decisions. Sometimes, you put off buying something now because it’s not in your budget–and because you have bigger fish to fry!
Fast Fact Even big-time celebrities can get into trouble if they don’t watch their expenses. Match the bankrupt star with their silly purchase.
(Answers: 1-B, 2-A, 3-D, 4-C)
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The Tale of Bradley Budget
Brad wants to save up for a class trip to the Grand Canyon–a cool $300. Even though his last name is Budget, Brad has never made one–but if he’s going to go on the trip, he’ll need one, and fast!
Brad works at his dad’s car lot, Budget Autos, detailing used cars after school. He works 10 hours a week and makes $10 an hour. How much does he make per week?
(Hours Worked Per Week) X (Hourly Wage) = Weekly Income 10 X $10 = Weekly Income $100 = Weekly Income
Now he makes a list of expenses. For his monthly cell phone bill, he just divides by four to get a weekly amount.
Brad is spending every penny! He needs to make a budget, and fast. He has three months to save $300. That’s about $25 a week. What should he cut? Here’s the budget Brad came up with:
How much will Brad save if he sticks to his budget?
(Savings per week) x (12 weeks) = Total Savings Amount $25 x 12 = $300
He’ll have enough money to go on the trip–but he had to give up a few things to get it. He could have asked his dad for an extra shift, but Brad decided to cut expenses instead. That’s what budgets are all about–choices!
Tips for Budgeting
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Ask John Paul
Q. I want to make a budget, but my expenses occur at different times–daily, weekly, monthly, and yearly. What should I do?
A. A budget is usually built on a monthly basis. First, figure out your monthly income. Next, list all your expenses. There will be expenses that occur weekly, monthly, and yearly. For example, if you have a weekly donut and a yearly subscription to Tennis Magazine (Federer’s awesome), multiply your weekly expense (the donut) by 4, and divide the yearly expense (the magazine) by 12. This will give you a monthly expense for each item. Then, you can compare monthly income vs. monthly expenses. You can do the same thing for a weekly budget–just divide the yearly expense by 52. If you stick to a budget, you’ll always have enough money for your Saturday pastry–and you won’t miss out on Wimbledon, either!
John Paul Pigéon is a 12-year-old financial guru from Fort Worth, Texas, whose mission in life is to inspire financial success in a world of little people. Have a question for John Paul? Send it to askjohnpaul@bizkids.com. Your question may be selected for our next newsletter
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Biz Kid$ of the Month The savvy Biz Kids who run the Jazzy Jellyfish Café in Gulf Breeze, Florida, serve up great food for a good cause–all their profits go to charity!
Tell us about your business.
Coles: We sell tickets for dinners to raise money for charity, $12 for adults and $8 for kids. It’s run by our second- and third-grade classes.
Jill: We transform the cafeteria with cool decorations. We serve 150 people a night plus the staff.
What are some of your expenses?
Madison: We have to buy decorations, food, T-shirts, and other supplies. We have to stick to a budget so our profits stay high. How do you decide who does what? Jill: We all applied for jobs.
Madison: I applied for the decorating committee, but I ended up in marketing. Turns out, I really like it.
What’s the most important thing you learned?
Coles: To set high goals for yourself. We originally planned to raise $7,500, but we decided to set a goal of $10,000.
Chase: Also, you make sacrifices to run a successful business. We give up recess and homework time.
Madison: But it’s worth it!
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Info to Go
Next Month…
What are you going to do with all the money you saved from sticking to a budget? In next month’s issue of The Vault, you’ll learn all about savings and what to do with them. Don’t miss it!
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