Spending decisions – What do you spend your money on?

If you want to make sure you’re being smart with your money, you need one very important thing: a budget.

What Is A Budget?

Budgeting is a way of planning your finances to ensure that you have enough money to purchase items you want.

We’ll look at one month as an example.

Example: when you combine your allowance and the money you earn from your part-time job, you make two thousand pounds per month. This total is called your income.

So what kind of budget should I use to make sure I’m being smart with my income? There’s a useful method called the ‘50/30/20 Rule’ that suggests you spend 50% of your income on your needs, 30% on your wants and 20% on your savings.

For most people, spending is easy and saving is hard, so pay yourself first: automate transferring money into your savings account at the start of the month. Eventually, this money will be there for you in an emergency, or to put towards a spending goal.