Budgeting Pocket Money
What a budget is; planning how to spend a fixed amount of pocket money or allowance; making trade-offs between different things you want to buy
What a learner can do afterwards
- Create a simple spending plan for £10 showing what they would buy and how much is left
- Explain what a budget is and why it helps to plan spending
- Identify a trade-off (choosing one thing means not having enough for another)
1 · Read
A budget is a simple plan for your money. Before you spend anything, you decide what you want to buy and how much it costs. That way you know if your money is enough.
Zara gets £10 for the school fair. She wants a toy for £4 and a drink for £3. She adds them up: £4 + £3 = £7. That leaves her £3 to save or spend later.
When you choose one thing, you might not have enough left for something else. That is called a trade-off. Think about what matters most before you spend.
A budget is a plan you make first, so your money lasts and you know your trade-offs.
More to read
What is a budget?
A budget is a plan for your money. It is like a map that shows where your money will go.
A budget answers three questions. How much money do I have? What do I need to spend it on? How much can I save for later?
Why does a budget help? Money is limited. You cannot buy everything you want at once. A budget helps you choose what matters most. It stops you from spending too much and running out of money before the week is over.
Here is a small example. Imagine you get £5 pocket money. Your budget might be: £2 for a snack, £2 to save in your piggy bank, and £1 for a toy. Now you know exactly where every pound goes.
Planning a budget: How do you start?
Ready to make your first budget? It is easy. You just need paper and a pencil, or you can ask a grown-up to help you use a computer.
Step 1: Write down how much money you have. This could be your pocket money or allowance.
Step 2: Write down the things you want or need to buy. Put them in groups. Needs are things you must have. Wants are fun things. Savings are money you keep for later.
Step 3: Give each group some money. Add it all up and check it is not more than you have.
Step 4: Look at your budget often. If you spend more on one thing, you must spend less on another. That is called a trade-off.
Try it with £10. Maybe £4 for needs, £4 for wants, and £2 for savings. Your money now has a plan, and you are in charge of it.
4 Ways to Create a Working Budget
A budget shows where your money goes. It also helps you spend less than you have, so you never run out.
One easy way to start is to use a worksheet. A worksheet lists your spending groups for you, like needs, wants, and savings. You just fill in the numbers.
Another way is the envelope idea. You put cash into envelopes with labels, like snacks, toys, and saving. When an envelope is empty, you stop spending from it until next time.
You can also make a simple list. Write your money at the top. Under it, write what you will buy and how much each thing costs. Add the costs and make sure the total is smaller than your money.
Pick the way you like best. The best budget is the one you will actually use and check every week.
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