Budgeting
Give each dollar a purpose and make tradeoffs with confidence.
Start with the idea
A budget is a plan for how money will be used. Start with take-home income, list expenses, then decide what remains for saving and flexible spending. A useful budget can change when life changes; it is a tool for making choices, not a test of character.
Key takeaways
- Budget from take-home (net) pay, not gross pay.
- Pay yourself first: plan savings before flexible spending.
- The 50/30/20 guideline (needs/wants/savings) is a starting point, not a rule.
- Review the plan monthly and adjust when income or costs change.
By the end you can…
- Build a simple monthly budget
- Separate needs, wants, and goals
- Adjust a plan when income changes
Source: Consumer Financial Protection Bureau (CFPB), Your Money, Your Goals toolkit; consumerfinance.gov/consumer-tools/educator-tools/your-money-your-goals/.
Vocabulary flashcards
50/30/20 budget planner
Split take-home pay into needs, wants, and savings and see how your plan compares.
Give the remaining $100.00 a job: savings, a goal, or a buffer. The markers show the 50/30/20 guideline.
Check your understanding
Question 1 of 3
Printable activity
Use this with the physical kit, in a group, or on your own.
- Sort example expenses into fixed and variable costs.
- Use the monthly plan cards to allocate a fictional paycheck.
Reflection: What would you want to know before making this choice in real life?
Practice questions
- Jordan brings home $1,600 a month. Their rent and transit pass are covered. Which is the best first step for planning the remaining $700?
- Spend it on whatever feels urgent
- List other regular expenses and a savings goal
- Borrow the same amount each month
- Which expense is usually a fixed expense?
- Groceries
- Monthly rent
- Concert tickets
- Using the 50/30/20 guideline, how much of $2,000 in take-home pay would go toward savings and debt payoff?
- $200
- $400
- $600