What is a Budget?

CASH KID

In this episode I will talk about a financial skill called budgeting. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

What is a budget?

Hey you guys it's Cash Kid here, back again with another Cash Kid Podcast episode. If you’ve missed the first four, be sure and go back and listen to those. I’ve already had some friends start investing using tips they learned in previous episodes, so I’m encouraged by this!

Today, we're going to be talking about what is a budget? I've really been looking forward to this one because I think it's a great skill that kids need to have and from what I’m told…maybe some adults too.

In fact, do you know how many US households actually prepare a monthly budget? The answer coming up!

Alright, let’s get started.

So you’ve got some cash. Maybe from an allowance, or that money your grandma gave you for your 7th birthday. Here you go sweetie. Whoa, Thanks grandma!

Whatever it is, what are you going to do with it? Spend it, hide it away… or maybe invest it? Let’s start learning how to make that money grow.

Time to learn how to be a cash kid.

(1:30)

So in order to get into what a budget is we need to understand what two words mean. They are revenue and expenses.

So revenue is your income (money you make) from doing something. For instance, say you run a lemonade stand. That happens a lot in my neighborhood. Let’s say you make $50 by selling lemonade. But, you had to pay for the lemons and all the other supplies you needed. So those supplies are your expenses because you had to pay for them. So you have to take the money you gain which is your revenue and subtract it from your expense and you get a profit. You had $15 in expenses. So $50 - $15 is $35 so that's your profit. Now, you have $35 to budget what you want to do with it. You could spend it or maybe invest it or maybe both. I use an app called Greenlight that allows me to easily set money into savings, spending, or investing.

Thankfully, as kids, we don’t have a lot of expenses at this time in our lives (Thanks Mom and Dad)... but overtime, that’s going to change. And understanding now what revenue and expenses are will make us smarter at budgeting.

(music break)

(2:58)

A budget is a way of managing your money. Let’s say you run your lemonade stand over the next month and make a profit of $140. That’s great! But, you want to buy a new $50 video game, invest $40, buy your Mom a birthday gift for $20, and you went out with friends to an arcade and spent $35? Will you have enough?

Nope, you’re $5 short! And don’t you decide to skimp out on Mom’s present either. Just try better next month to know how much you have to spend, to stay within your goal each month.

Staying within your budget each month can help you gain money over time. And by setting aside dollars in your budget upfront for investing and savings will allow you to watch your money grow consistently.

(music break)

(3:50)

Alright, earlier I asked if you know how many families actually prepare a monthly budget. The answer according to CreditDonkey.com is only 32%. That’s not a lot! Let’s rise above Cash Kids and start smart budgeting practices early.

That's it for today. I really hope you guys enjoyed today's episode.Stay tuned and listen for more. And tell your family and your friends. Cash Kid out!

Disclaimer:

The information presented represents the views and opinions of the guests. This show does not intend to provide personal investment advice through this podcast. This content has been made for informational and educational purposes only. To make a full and informed investment decision, we advise you to speak with a financial advisor and for kids, definitely your parents first before investing.