What does it mean to budget? This is a way to keep track of how much money you get, how much you spend and how much you have left over. It helps you to keep track of your money and what you have to do or have done with it.
If you get payed one day for your job, or own a company or get an allowance you would want to know how much money you have in order to figure out if you can afford something. You also do not want to think you have money in the bank but meanwhile you do not have any left.
The most common way to make a budget is to write down all the money you get and everything you spend. Here is an example:
Mai-Ling's Babysitting Service
Date Expenses Income
6-13 $20
6-20 $20
6-27 Gasoline $20
At the end of June, Mai-Ling has spent $20 but earned $40. She has $20 left over.
If you only get a small allowance, it will be easy to know how much money you have but large companies have a lot of things and people to pay, and also money coming in, so they must keep track of it.
You have income - which is the money you have and expenses which is the thing you have to pay for or want to buy. The money left over in the company will be your profit.
The main purpose of a company is to make a profit. This money is again used to buy new material to produce more things to sell or the owner of the business can use it for what he sees fit.
It is important to budget from a young age because it will help you to learn to work carefully with your money and not overspend or go into debt. Write down your budget and stick to it.
Task to complete
• Work out your own budget – it can be real or imaginary. Also think of ways in which you can earn extra money.