BET Lesson 1 of 11 · 4 min read
What a budget is, and why it helps
A budget is simply a plan for your money. Here’s what it does for you and the four steps to make one.
A plan, not a punishment
A budget is an organized plan that helps you keep track of how much money you earn, how much you spend and how much you’ve saved. Some people call it a spending plan, which is a good way to think about it: it’s you deciding ahead of time where your money should go.
Every budget has three parts:
- Income: the money that comes in.
- Expenses: the money that goes out.
- Savings: the money you set aside for later.
What a budget does for you
A budget shows you whether you can cover your bills and still save for the things that matter to you, like an emergency, a car, a home or retirement. It turns “I hope there’s enough” into “I know there’s enough”, or shows you early when there isn’t, while you still have time to change course.
The four steps
- List where your money comes from: paychecks, benefits, side work.
- Track where it goes: what you actually spend, not what you think you spend.
- List your bills and when each one is due.
- Put it together into a working budget, then check it against real life each month.
Remember
- A budget is a plan for your income, expenses and savings.
- It shows early whether your money covers what matters to you.
- Four steps: income, tracking, bills, then the plan itself.
Start a ledger
In BET, a ledger is where your income and spending are recorded. Create one now, and the following lessons will help you fill it in.
Sign in with Google to try itSources and further reading
- Budgeting: How to create a budget and stick with it (Consumer Financial Protection Bureau)
- Money Smart, Chapter 3: Budgeting and Shopping (FDIC)
- Budgeting for needs and wants (teacher guide) (Consumer Financial Protection Bureau)