Managing Your Money
Knowing the best way to spend your money is called “managing your money”. It’s not about scrimping and saving and missing out on fun things. It’s about being smart about what you want and what you need. Creating a budget, or spending plan, can help. Here are three simple steps to follow:
- Figure out how much money you have. The first thing to know is what’s coming in every month. Are you making money from a job — like babysitting or mowing lawns? Do you have an allowance? Did you just get a birthday card full of cash from your aunt? Add it all up.
- Keep track of how much money you spend. Get and save receipts so you can see where your money is going. If you really pay attention to what you spend your money on, it will help you decide what you want to continue buying and what you can give up.
- List items in order of importance. This is known as prioritizing. You can put the items you buy most often into categories, like snacks, games, music, clothes, sports, etc. For example, if clothes are the most important item for you, make that your first priority. Assign a dollar amount for what you expect to spend each month on clothes — let’s say, $30. Keep the receipts from your clothing purchases and, at the end of the month, add them up. Then, subtract the amount you actually spent from the amount you expected to spend. If you only spent $22, that leaves you with $8. Now, you can either add that money to your next month’s budget, add it to another category or put it into a savings account for future use.