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Financial News (24)
May 25, 2018
You just landed your first job - whether it is babysitting, fast food or mowing lawns - you officially have your own income! You could take your check and hit the mall until it’s gone. The problem with that is it is two more weeks until your next payday. With that in mind, the wise move would be to budget yourself. By setting and maintaining a budget, you will set yourself up for success, when you are out on your own because it will already be a habit.
There are two major components to a budget: 1. paying your expenses and 2. paying yourself. Ideally, paying yourself would mean you would spend some and you would save some. There are a few simple steps to take to help you with creating a well-developed budget that you can stick to every paycheck. Before you go any further, ask your parents or a trusted adult to help you. They have a household budget far more complex than what you will need. That means they are your resident expert.
First, determine your income. If you have a job, you will need to look at your paystub. Unfortunately, a hard lesson for everyone is the difference between what you make and what you actually take home. That’s because there’s a little thing called taxes we all have to pay. They get deducted from your check. Are you also lucky enough to get an allowance? If so, add that and your net paycheck for a month. That is what you have to work with.
Next, determine your required expenses. Do you have to pay your own cell phone? Gas or insurance for your car? These are examples of your required expenses. Get your monthly total.
Now, subtract your expenses from your income. This will determine if you make enough to cover your monthly expenses. It will also tell you how much money you have left over.
The amount you have left is your discretionary fund. You can either spend them or you can save them. The best approach is probably to save some and to spend some. Keep in mind the saying “money doesn’t grow on trees,” is true. This step is important for help to be involved. They can help talk you thru how much you should save vs. how much you can spend. Saving will help you with college or buy a car or get your first apartment. But, you need to have some to just spend while out with your friends, so keep it in your budget.
Simply put, your income should exceed your outgo. If it doesn’t, look at ways to cut your discretionary spending or ways to make a little more money. Can you go out for pizza only one night a week and hang out with your friends at home another night? Can you maybe mow a lawn or two for extra income? Your trusted adult can help you figure it out, but pay attention. The skills you learn now will be highly beneficial in adulthood.
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