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Financial Literacy: Budget

This guide provides information and resources to help promote financial literacy instruction.

What is a budget?


A budget is a plan you write down to decide how you will spend your money each month.

A budget helps you make sure you will have enough money every month. Without a budget, you might run out of money before your next paycheck.

A budget shows you:

  • how much money you make
  • how you spend your money

Why do I want a budget?

A budget helps you decide:

  • what you must spend your money on
  • if you can spend less money on some things and more money on other things
  • helps you achieve your financial goals

For example, your budget might show that you spend $100 on clothes every month. You might decide you can spend $50 on clothes. You can use the rest of the money to pay bills or to save for something else.

Budget Basics

Budgeting is essential to helping you achieve your financial goals.  You need to know how much money is coming in, going out, and in savings.

     Income In (salary, investment income)

-   Expenses (bills, subscriptions, loans, food)


=  Money you can put towards your financial goals

Needs VS Wants

Do you really need that new 72" flat screen?  Well if your TV is broken, maybe you do need a new TV but does it have to be this years 4k model?  This is the debate of need vs want.  

What is a need?  Things you cannot live without such as food, housing, depending on your job a form of transportation, maybe even a cell phone.

What is a want?  Something you can live without such as high end clothes, streaming subscriptions, the latest model of any electronics.

Discretionary Spending vs Mandatory Spending

Discretionary Spending - spending that you choose, extras

Mandatory Spending - spend you have to make such as food and utilities

Many financial planners would say you should only spend money on discretionary items only after you have paid all of your mandatory items and have placed money in your savings.

What is the 50/30/20 rule?

What is the 50/30/20 rule?

The 50/30/20 rule is a budgeting technique that divides your take-home income into three categories by percentages. It’s a simple way to track your spending. Here’s the breakdown:

Rent or mortgage Streaming services Emergency fund
Car payment Shopping Retirement
Utilities Vacations Child’s education
Groceries   Credit card payments

Taken from Better Money Habits (