Have you ever
wanted something that your parents wouldn't buy for you and
that you didn't have the money to buy yourself? Say, a new
bike, concert or ball game tickets, or a CD player? Or have
you imagined owning a car or a computer? Having a savings plan
and a budget can help you save for both short-term financial
goals (like buying a computer) and long-term financial goals
(like saving for college).
Some people think
of budgets as denying themselves stuff they want - sort of
like a diet. But the opposite is actually true. Sticking to a
budget means you waste less money on little things you hardly
notice, like gum or soda, and save more for the bigger,
important items you really want.
Creating a budget
The first thing you need to do is think about how you earn
money. Kids usually get money, also called an income, from
allowances, part-time jobs, or gifts. Start by writing down
the sources of your income - the amount you receive and how
often you receive it. For example: allowance $7 a week. The CYIF
Allowance Calculator can
help you track your sources of income.
Next, do you and
your parents like to donate money to organizations that help
other people or animals? Think about taking a portion of your
income, for example 10 percent, and keeping it in a special
place, like a giving jar. After you've collected money for six
months or a year, you can donate it to a charity or a cause
you believe in. (Our article "Sharing
Your Money with Others" provides
more information on giving to charities.)
Then separate your
remaining income into savings and spending money. Many experts
recommend dividing your income into thirds:
-
One third can be used for spending now on small items
-
One third is for short-term saving, for items that you can't
afford to pay for all at once, like a new bike or a computer
game
-
One third is for long-term saving, for things like attending
college, buying a car or maybe even starting a business
Discuss your
savings plan with your parents. They may be able to give you
advice and suggestions. With a savings plan, a budget and a
healthy dose of patience, you'd be surprised at how quickly
your buying power can grow.
Stories of two savings plans
Mike is eight and saving for a Playstation®. Camille is about
to enter high school and wants to buy a computer. Read how Mike and Camille worked
toward their financial goals with a budget. |