Glencoe Keyboarding with Computer Applications

Develop Budgeting Skills

Introduction
Learn how to create a personal budget.

Directions
Read the information below and apply what you learn to answer the questions. Key your answers into the spaces below. After you finish keying, check your work carefully and click Submit.

Create a Personal Budget
Although your parents probably take care of many of your financial needs now, it is never too early to learn how to budget your money and follow a clear financial plan.

Evaluate Your Financial Goals Before you create your budget, you need to know what your financial goals are. First, think about what you plan to spend money on. Is it for frequent small purchases, like fast food, movies, and CDs? Perhaps you are saving for a large purchase, such as a car. Or do you need to pay monthly expenses like your phone bill or car insurance?

Second, you much consider how long it will take you to achieve your goals. For example, are you saving for college in four years? Or do you just need enough for gas at the end of the week?

Your financial goals will change throughout your life, but it is important that you consistently reevaluate them. Remember that your goals should always:

• Be realistic.
• Be specific.
• Have a clear time frame.
• Help you decide the action you need to take.

Follow a Budget After considering your financial goals, you must determine how much income you have to spend on those goals. It is also very important to save some of your money, no matter how small the amount. Try saving 1 percent of your take-home pay or allowance the first month, 2 percent the second month, and so forth. At the end of the year, you will be saving 12 percent.

Use the following tips to make sure you stay within your budget:

• When you receive your paycheck or allowance, pay yourself first by saving some money from it.
• Spend less than you earn. Keep a balance sheet for the month that shows what you have earned, what you have spent, and what is left over. If you have a checkbook, balance it every month.
• Work out a budget and stick to it. You can use financial software or a spreadsheet to help you keep track of your budget and see if it is working.
• Pay your bills and taxes on time. Avoid paying late fees or high interest rates on money that you owe.
• Do not borrow what you cannot pay back.

If you find it difficult to stick to your budget, go back to your financial goals. Remember that being financially responsible will help you reach those goals.

Find Information on a Web Site CNN Money (money.cnn.com) has an excellent tutorial on financial planning called Money 101. If you need to find out more about this topic, get your teacher’s permission to use a search engine. Here are some keywords you might use: personal budgets, personal finance.

1			What two considerations to think about when determining your financial goals?
2			Why is it important to be realistic and specific when determining your financial goals?
3			Besides your financial goals, what else do you need to determine when creating a budget?
4			What plan can you follow to get yourself to where you are saving 12% of your monthly income by the end of a single year?
5			What are two ways you can make sure you are sticking to your budget and spending less than you earn?