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Aug 12, 2021

The budget you didn't even know you needed

You’ve probably heard of a budget, but do you have your own? A budget’s not only for adults. It’s something you can build right now to make the most of your money, whether you’re managing $40 a month, or $400+.  

What is a budget?

So, what is a budget? A budget is a plan for your money. To create one, you don’t need a long list of monthly bills — like electricity, water or other household expenses. 

In fact, you may not have any bills at all. A budget can help you get ready for those things one day, all while making every dollar count today.

The most basic rule of a personal budget is that the money coming in must be greater than the money going out. Here are 5 simple steps to starting your very own budget and making the best plan for your money!

Step 1: Add up your income.

income chart

This is how much money you expect to earn or receive in a month. Money’s not unlimited, which is why income is always the starting point of your money plan.

This could be from a weekly allowance, earnings from chores or odd jobs — or even an employer at a steady job., Remember to include any special occasions where you receive money gifts, like birthdays or holidays.

Pro tip: If you’d like to see that income number go up a little (or a lot), read through these ways to earn money.

Step 2: Group your expenses by category.

expenses chart

This helps you see where your money actually goes. Look back at your purchases to add up a regular monthly total in different spending categories.

First up are your “Fixed” expenses. These are the same amount every month, like a phone bill or car payment (if you have one).

Next are your “Variable” expenses, which change every month, like gas and spending money. Categories include things like food, clothes, technology, games, entertainment (movies or concerts) and more. 

Step 3: Set savings goals.

savings chart

This is how much money you save — for your financial goals and for your unplanned expenses.

Putting money into savings is like paying yourself. If you start saving regularly now and keep it up, you’re getting ready for your financial independence. And investing a portion of your savings helps you build long-term wealth, especially when you’re still in school.

How much money should you save each month? As much as you can!  Decide what goes to your unplanned savings (emergency funds and maybe “fun” funds, too) and your planned investing. Any other specific goals are up to you. We’ve got you covered with 5 Savings Boosts to make your money work harder for you. 

Step 4: Balance it.

balance chart of income, expenses, savings

Now you’ve got everything you need to create your budget. After you total everything up, remember what’s most important — the money coming in must be greater than the money going out. If it’s the other way around, you’ll need to cut down on those expenses. 

Also, keep in mind that you can change the ways you’ve been spending in the past. Think about wants and needs, then put your money toward the things you value most. 

Would you rather have a quality book bag or 20 trips to a fast food restaurant? How about shares of stock in a shoe company vs. an extra pair of sneakers? Ponder some more "Would You Rather?" questions here. 

Decide how much you should spend in each category to balance your budget.

Step 5: Finally, track it!

chart of income, expenses, savings

A budget only works if you keep track of it throughout the month.

At the end of every month, compare what you spent to what you planned to spend and see how you did. Sometimes, you may spend less in one category and more in another. That's okay  — as long as your budget still balances out. 

If you spend less on all your variable expenses, kudos to you! That’s extra money to pay yourself. It can go right to Savings or Investing. 

But, don’t worry if you need a little extra help to keep your spending on track. With Greenlight Spend Controls, you can set limits for different categories or stores and hold yourself accountable to sticking to your budget. 

Greenlight puts you in charge of earning, spending, saving and investing — and making your money work for you.

Try today. Our treat.

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